On June 30, 2021, Exploration Inc. signs a lease requiring quarterly payments each year for the next

Question:

On June 30, 2021, Exploration Inc. signs a lease requiring quarterly payments each year for the next five years. Each of the 20 quarterly payments is $29,122.87, with the first lease payment beginning September 30. The company’s normal borrowing rate is 6%.

Required:

1. Calculate the present value of the lease payments. Round to the nearest whole dollar.

2. Record the lease on June 30, 2021.