Lessee ABC INC

Lessee ABC INC.leased from Lessor QRS a machine that cost $35,000, which was properly classified as a finance lease by both parties.Assume the lessor used a 12 percent implicit interest rate and that the lessee was informed of that rate.The lease did not include a bargain purchase option and the estimated residual value at termination of the lease was zero.Equal semi-annual lease payments are to be made at the start of each such period, including one on the date the lease was signed.The amount of each semi-annual payment, assuming a five-year lease term, would be:

A) $9,709
B) $2,074
C) $2,916
D) $4,755
E) $4,486

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