On January 1, 2013, Rodeo Warehouse purchased new equipment for its distribution center. The equipment cost $450,000; Rodeo paid $50,000 as a down payment and is required to pay $26,886 each six months for the next 10 years, with the first payment due on June 30, 2013. Rodeo's annual cost of borrowing is 6%.

How much interest expense will Rodeo record for the first six months, and what is the outstanding loan balance as of June 30, 2013?

	a.	$2,886 expense; $397,114 loan balance
	b.	$24,000 expense; $397,114 loan balance
	c.	$13,500 expense; $436,614 loan balance
	d.	$12,000 expense; $385,114 loan balance
	e.	none of the above