3. On January 1, Smith Industries leased equipment to a customer for a four-year period, at which time possession of the leased asset will revert back to Smith. The equipment cost Smith $350,000 and has an expected useful life of six years. Its normal sales price is $350,000. The residual value after four years is $50,000. Lease payments are due on December 31 of each year, beginning with the first payment at the end of the first year. The interest rate is 5%. Calculate the amount of the annual lease payments. (Round your answer to the nearest whole dollar amount.) The present value of $1: n=4, i-5% is 0.82270. The present value of an ordinary annuity of $1: n-4, i-5% is 3.54595. The present value of an annuity due of $1: n=4, i-5% is 3.72325. A. $87,104 B. $82,955 C. $98,704 D. $77,337 4. Lopez Plastics Co. (LPC) issued callable bonds on January 1, 2018. LPC's accountant has projected the following amortization schedule from issuance until maturity: Date 1/1/2018 Cash interest Effective interest Decrease in balance Outstanding balance $ 207,020 6/30/2018 $ 7,000 $ 6,211 $ 789 206,230 12/31/2018 7,000 6,187 813 205,417 6/30/2019 7,000 6,163 837 204,580 12/31/2019 7,000 6,137 863 203,717 6/30/2020 7,000 6,112 888 202,829 12/31/2020 7,000 6,085 915 201,913 6/30/2021 7,000 6,057 943 200,971 12/31/2021 7,000 6,029 971 200,000 LPC calls the bonds at 105 (105% of the face value) immediately after the interest payment on 06/30/2019 and retires them. What gain or loss, if any, would LPC record on this date? A. 12,791 loss B. $5,420 gain C. $5,420 loss D. $2,283 loss A