A firm enters into a 5-year lease. The Present Value of the Lease Payments is $42,000. The firm trying to determine lease liability at the start of the lease. Assuming a discount rate of 5%, what is the lease liability if:

A: Lease includes an unguaranteed residual of $5,000. The leased asset is expected to be worth $2,000 at the end of the lease.

B: Lease includes a guaranteed residual of $5,000. The leased asset is expected to be worth $5,000 at the end of the lease.

Group of answer choices:

Lease A: $42,000 Lease B: $45,918

Lease A: $42,000 Lease B: $42,000

Lease A: $44,351 Lease B: $45,918

None are correct

Lease A: $44,351 Lease B: $42,000