On January 1, year 1, Harrow Co. as lessee signed a five-year
noncancelable equipment lease with annual payments of
$100,000 beginning December 31, year 1. Harrow treated this
transaction as a capital lease. The five lease payments have a
present value of $379,000 at January 1, year 1, based on interest
of 10%. What amount should Harrow report as interest expense
for the year ended December 31, year 1?