Considering a capital lease with following conditions:

Annual lease payments of $250,000 from year 1 to year 7

Effective annual interest rate of 4% for the borrowed money

The asset can be depreciated based on MACRS 5-year life depreciation with the half year convention (table A-1 at IRS (Links to an external site.)Links to an external site.) over six years (from year 1 to year 6)

Calculate depreciation, principal, and interest.