On January 1, 2016, Watson Company signed a four-year lease requiring annual payments of $45,000, with the first payment due on January 1, 2016. Watson's incremental borrowing rate was 7%. Actuarial information for 7% follows:

3 Periods 4 Periods 5 Periods

Present value of an annuity due of 1 @ 7% 2.80802 3.62432 4.38721

Present value of ordinary annuity of 1 @ 7% 2.62432 3.38721 4.10020

Assuming the lease qualifies as a capital lease, what amount should be recorded as leased equipment under capital leases on January 1, 2016 (rounded to the nearest dollar)?

a. $197,424

b. $163,094

c. $152,424

d. $184,509