A lease involves payments of $1,000 per month for five years. The payments are made at the

Question:

A lease involves payments of $1,000 per month for five years. The payments are made at the end of each month. The lease also involves a guaranteed residual value of $10,000 to be paid at the end of the 5-year period. The fair value of the leased asset is $35,000. Compute the interest rate implicit in the lease.