I seem to understand the problem you are referring to.  Leasing is like a loan amortization.  The first year $7,132 is referring to the accounting interest paid calculated for income statement reporting purpose.  This amount is not affecting cash position similar to depreciation $25,000.  However when coming to Statement of Cash , the interest $7,132 can reduce the principal in the second year because like other loan amortization schedule, the first year interest is calculated in the second year.

Actually, this question is not setting so good.  I found out from other fixed income their example is hard to understand.  Don't waste time to drill down on detail. the exam type is not set like this.