Hayes Corp. is a manufacturer of truck trailers. On January 1, 2014, Hayes Corp. leases 11 trailers to Lester Company under a 7-year noncancelable lease agreement. The following information about the lease and the trailers is provided:
1. Equal annual payments that are due on January 1 each year provide Hayes Corp. with an 9% return on net investment (present value factor for 7 periods at 9% is 5.48592).
2. Titles to the trailers pass to Lester at the end of the lease. ni
3. The fair value of each trailer is $52,900. The cost of each trailer to Hayes Corp. is $47,900. Each trailer has an expected useful life of nine years.
4. Collectibility of the lease payments is reasonably predictable and there are no important uncertainties surrounding the amount of costs yet to be incurred by Hayes Corp. Calculate the annual lease payment. (Round present value factor calculations to 5 decimal places, e.g. 2.25.124 and the final answer to 0 decimal places e.g. 5,275.)