Two parties sign a lease with the following characteristics on 1/1/x1: ____ Interest rate, 10% ____ Lease term, 5 years ____ Useful life of leased asset at inception, 5 years _____ Lease payments are due each Dec. 31 ____ At inception, the leased asset’s cost is $500,000; its fair value is $600,000. Compute the increase in the lessor's pretax net income for 20x1 due to this lease.
a. 100,000
b. 50,000
c. 160,000
d. 60,000
e. 150,000