On April 1, 20x1, the Plymouth Finance Company leased equipment having a market value of $345,000 to Chestnut Hill Enterprises. The Carrying value of the equipment in Plymouth's inventory was $300,000 on this date. The lease is noncancelable and requires 20 equal annual payments, beginning on the date of the lease. Although the lease includes a $50,000 guaranteed residual value at the end of the lease term, Chestnut Hill believes the residual value will only be $40,000. The equipment has an estimated economic life of 25 years with zero residual value at that time. Plymouth determined its required lease payments using a discount rate of 10 percent. Plymouth also included executory costs in the annual lease payments for its annual property taxes on the building of $3,000 per year. Chestnut Hill has an incremental borrowing rate of 9.8% but knows Plymouth's implicit rate. Both firms use a calendar year. What is the required annual lease payment(including executory costs) to be paid by Chestnut Hill to Plymouth Finance(round to the nearest dollar)?

A. $35,591

B. $36,046

C. $38,591

D. $39,046