On January 2, 2018, Benson Co. leased a delivery truck from Modern Leasing Company. Modern paid $25,000 for the truck. Its retail value is $42,664. The lease agreement specified annual payments beginning on January 2, 2018, the beginning of the lease, and at each December 31 through 2021. Moderns interest rate for determining payments was 8%. At the end of the five-year lease term (December 31, 2022) the truck was expected to be worth $12,000. Benson guaranteed a residual value of $4,000. The amount of annual lease payments determined by Modern would be:

a. $8,000 b. $7,000 c. $6,000 d. $5,000