For each of the three independent situations below determine theamount of the annual lease payments. Each describes a finance leasein which annual lease payments are payable at the beginning of eachyear. Each lease agreement contains an option that permits thelessee to acquire the leased asset at an option price that issufficiently lower than the expected fair value that the exerciseof the option appears reasonably certain. (FV of $1, PV of $1, FVAof $1, PVA of $1, FVAD of $1 and PVAD of $1) (Useappropriate factor(s) from the tables provided.)
| Situation |
| 1 | 2 | 3 |
| Lease term (years) | | 5 | | | 5 | | | 4 | |
| Lessor's rate of return | | 9 | % | | 10 | % | | 8 | % |
| Fair value of leased asset | $ | 84,000 | | $ | 432,000 | | $ | 197,000 | |
| Lessor's cost of leased asset | $ | 62,000 | | $ | 432,000 | | $ | 157,000 | |
| Purchase option: | | | | | | | | | |
| Exercise price | $ | 22,000 | | $ | 62,000 | | $ | 34,000 | |
| Exercisable at end of year: | | 5 | | | 5 | | | 3 | |
| Reasonably certain? | | yes | | | no | | | yes | |
|
Determine the annual lease payments for each situation:(Round your intermediate and final answers to the nearestwhole dollar amount.)
