Corry Corp. leased equipment from First Corp. under a 4-year lease requiring equal annual payments of $344,152, with the first payment due at lease inception. The lease does not transfer ownership, nor is there a bargain purchase option. The equipment has a 4-year useful life and no salvage value. Corrys incremental borrowing rate is 10% and the rate implicit in the lease (which is known by Corry, Inc.) is 8%. Assuming that this lease is properly classified as a finance lease, what is the amount of interest expense recorded by Corry in the first year of the assets life?

ANS: $70,953

Please explain why the answer is as is.