On January 1, 2018, Ogleby Corporation signed a five-year noncancelable lease for equipment.

The terms of the lease called for Ogleby to make annual payments of $180,000 at the beginning

of each year for five years with title passing to Ogleby at the end of this period. The equipment

has an estimated useful life of 7 years and no salvage value. Ogleby uses the straight-line

method of depreciation for all of its fixed assets. Ogleby accordingly accounts for this lease

transaction as a finance lease. The minimum lease payments were determined to have a present

value of $750,578 at an effective interest rate of 10%.

With respect to this lease, for 2019 Ogleby should record

select one:

a. interest expense of $57,058

b. interest expense of $62,764

c. interest expense of $75,058

d. interest expense of $44,764

e. none of the above