Using the same information as found in P18-4, assume that the lease contains a guaranteed residual value of $15.000. The lessee guarantees the residual value.

Data from P18-4

On January 1, 2018. JLOU Company leases a fleet of stock delivery vehicles from Dolt Motors, Inc. Under the terms of the lease, JLOU must pay $65,000 on January 1 of each year, beginning on January 1, 2018, over a 4-year term. The delivery vehicles have a useful life of 4 years. JLOU depreciates similar vehicles that it owns using the straight-line method. JLOU's incremental borrowing rate is 12%, and the 8% implicit rate in the lease is known to the lessee. The vehicles cost Dolt Motors $200,000 and have a fair value of $232,511. Dolt has no uncertainties as to future costs and collection. The lease terms do not contain a transfer of ownership, and there is no purchase option. There is also no residual value specified in the contract because no residual value is expected at the end of the lease term by the lessor. Assume that there are neither initial direct costs nor nonlease components related to the lease agreement.

Required

a. Compute the annual rent payment needed to ensure that the lessor company recovers the fair value of the vehicles.

b. Compute the present value of the lease payments using this new payment (exclude the guaranteed residual value from this part of the problem).

c. Prepare the amortization table required for the entire term. Use the new payment and guaranteed residual value.