On January $1,2025,$ Sandhill Corporation signed a five$-$year noncancelable lease for equipment. The terms of the lease called for Sandhill to make annual payments of $$208000$ at the beginning of each year for five years beginning on January $1,2025$ with the title passing to Sandhill at the end of this period. The equipment has an estimated useful life of $7$ years and no salvage value. Sandhill uses the straight$-$line method of depreciation for all of its fixed assets. Sandhill accordingly accounts for this lease transaction as a finance lease. The lease payments were determined to have a present value of $$867332$ at an effective interest rate of $10\%.$

In $2025,$ Sandhill should record interest expense of

$$86733.$

$$142067.$

$$121267.$

$$65933.$