Answer:
interest expense: $ 164,621.65
Explanation:
We solve for the present value of the lease value:
[tex]C \times \frac{1-(1+r)^{-time} }{rate} = PV\\[/tex]
C 320,000.00
time 10
rate 0.1
[tex]320000 \times \frac{1-(1+0.1)^{-10} }{0.1} = PV\\[/tex]
PV $1,966,261.4738
We made the first payment which decrease our payable:
1,966,261.47 - 320,000 = 1,646,261.47
And now, from this amount we solve for the interest expense:
And now, we calculate the 10% interest for the year:
1,646,216.47 x 10% = 164,621.65 interest expense