Benedict Company leased equipment to Mark Inc. on January 1, 2014. The lease is for an eight-year period, expiring December 31, 2021. The first of eight equal annual payments of $600,000 was made on January 1, 2014. Benedict had purchased the equipment on December 29, 2013, for $3,200,000. The lease is appropriately accounted for as a sales-type lease by Benedict. Assume that at January 1, 2014, the present value of all rental payments over the lease term discounted at a 10% interest rate was $3,520,000.
What amount of interest income should Benedict record in 2015 (the second year of the lease period) as a result of the lease?
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