On January 2, 2020, Harley, Inc. signed a ten-year noncancelable lease for a heavy duty drill press. The lease stipulated annual payments of 400,000 starting at the beginning of the first year, with title passing to Harley at the expiration of the lease. Harley treated this transaction as a finance lease. The drill press has an estimated useful life of 12 years, with no salvage value. Harley uses straight-line depreciation for all of its plant assets. Aggregate lease payments were determined to have a present value of 2,400,000, based on implicit interest of 10%. In its 2020 income statement, what amount of interest expense should Harley report from this lease transaction?

0

200,000

180,000

150,000

135,000