On 1 January N1, the RENT company enters into a rental agreement which underlying asset is an office building for the companys own use: Useful life of the building: 40 years, straight line depreciation. Leasing payment: 300,000 per year. The first payment is made on 1 January N1. Interest is considered paid at term. The second payment is made on 31 December N1. The last payment will be made on 31 December N12. The RENTs incremental borrowing rate is 4.5 %. CALCULATE THE LEASE LIABILITY TO BE RECORDED ON THE DATE OF LEASE SIGNING.

A. 2,904,855.73

B. 2,735,574

C. 3,600,000

Please explain the formula applied