How much interest revenue will Ace recognize for Year One?

The Ace Company buys cars and sells them at 20 percent above cost. On January 1, Year One, the company buys a car for $40,000 and immediately leases it for its entire six year life. Assume that annual payments for this lease will be $10,000 per year starting on January 1, Year One. This payment amount was based on an implicit interest rate of 10 percent. How much interest revenue will Ace recognize for Year One?
$3,000
$3,800
$4,000
$4,800

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