Choose the correct answer

On January 1, 2022, Crown Company sold property to Leary Company. There was no established exchange price for the property, and Leary gave Crown a 2,000,000 zero-interest-bearing note payable in 5 equal annual installments of 400,000, with the first payment due December 31, 2022. The prevailing rate of interest for a note of this type is 9%. The present value of the note at 9% was 1,442,000 at January 1, 2022. What should be the balance of the Notes Payable account on the books of Leary at December 31, 2022 after adjusting entries are made, assuming that the effective-interest method is used?

a. 1,442,000

b. 2,000,000

c. 1,171,780

d. 1,553,600