A capital lease requires rental payment of $2000 annually. Fair value of the leased equipment at inception of the lease is $10000 and the implicit interest rate is 12 percent. If the present value of the lease equals the fair value of the equipment at inception of the lease, the interest expense recorded by the lessee in the second year of the lease is closest to:（）

A. $1056.

B. $1104.

C. $1200.