On January 1, 2021, Cullumber Corporation signed a five-year noncancelable lease for equipment. The terms of the lease called for Cullumber to make annual payments of $180,000 at the beginning of each year for five years with title passing to Cullumber at the end of this period. The equipment has an estimated useful life of 7 years and no salvage value. Cullumber uses the straight-line method of depreciation for all of its fixed assets. Cullumber accordingly accounts for this lease transaction as a finance lease. The 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 2022 Cullumber should record

a. interest expense of $57,058.

b. interest expense of $75,058.

c. interest expense of $44,764.

d. interest expense of $62,764