On December 31, 2018, Perry Corporation leased equipment to Admiral Company for a five-year period.
The annual lease payment, excluding nonlease components, is $42,000.
The interest rate for this lease is 11%.
The payments are due on December 31 of each year.
The first payment was made on December 31, 2018.
The normal cash price for this type of equipment is $155,000 while the cost to Perry was $134,000.
For the year ended December 31, 2018, by what amount will Perry's earnings increased due to this lease (ignore taxes) ?
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