Ace Leasing acquires equipment and leases it to customers under long-term sales-type leases. Ace earns Interest under these arrangements at a 4% annual rate. Ace leased a machine it purchased for $770,000 under an arrangement that specified annual payments beginning at the commencement of the lease for five years. The lessee had the option to purchase the machine at the end of the lease term for $200,000 when it was expected to have a residual value of $330,000. (FV of $1. PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use approprlate factor(s) from the tables provided.) Calculate the amount of the annual lease payments. (Enter amounts as positive values rounded to the nearest whole dollar.) X Answer is complete but not entirely correct. Purchase Option Table or calculator function: PV of $1 n = 5 = $ Amount to be recovered (fair value) Purchase option Amount to be recovered through periodic lease payments 4% Present Value 770,000 1X 1 x $ Lease Payment Table or calculator function: PVAD of $1 n = 5 i = 4% Lease Payments S 1x Amount of fair value recovered each lease payment TABLE 2 Present Value of $1 $1 PV = (1+1) 1.04 1.596 2.596 3.5% 5.09 5.596 6096 7,096 100% 11.09 12.09 20.096 1 099010 098522 0.98039 0.975610.97087 0.96618 096154 0.95694 095238 0.94787 0.94340 0.93458 0.92593 091743 0.90909090090 0.89286 0.83333 20.98030 097066 096117 0.95181 0.94260 093351 0.92456 091573 0.90703 089845 0.89000 0.87344 0.85734 0.84168 0.82645 0.81162 0.79719 069444 3 0.97059 0.95632 0.94232 0.92860 0.91514 0.90194 083900 0.87630 086384 085161 0.83962 0.81630 0.79383 0.77218 0.75131 0.73119 0.71178 0.57870 + 0.96098 094218 0.92385 0.90595 0.58849 087144 0.85480 0.83856 0.82270 0.80722 0.79209 0.76290 0.73503 0.70343 0.68301 0.65873 0.63552 048225 5 0.95147 0.92826 0.90573 0.88385 0.86261 0.84197 082193 080245 0.78353 0.76513 0.74726 0.71299 0.63058 0.64993 0.62092 0.59345 0.56743 040188 . 0.94305 0.91454 0.88797 0.86330 0.83748 0.81350 0.79031 0.76790 0.74637 4.73535 6.70096 0.6664 0.68017 0.5962 0.56417 0.53464 0.56665 0.33490 7 093272 090103 0.87056 0.84127 0.81309 0.78599 0.75992 0.73483 0.71068 0.68744 0.66506 0.62275 0.58349 0.54703 0.51316 0.48166 0.45235 0.27908 8 0.92348 0.88771 0.8549 0.82075 0.78941 0.75941 0.73069 0.70319 0.67684 0.65160 0.62741 0.58301 0.54027 0.50187 0.46651 0.43393 0.40388 0.23257 90.91434 0.87459 0.83676 0.80073 076642 0.73373 0.70259 067290 064461 061763 0.59190 0.54393 0.50025 0.46043 0.42410 0.39092 036061 0.19381 10 0.90529 0.86167 0.82035 0.78120 0.74409 0.70892 067556 0.64393 0.61391 0.58543 0.55839 0.50835 0.46319 0.42241 0.38554 0.35218 0.32197 0.16151 11 089632 0.34893 0.80426 0.76214 0.72242 0.65495 0.64958 0.61620 _58468 55491 0.52679 0.47509 0.43553 0.38753 0.35049 0.31728 0.38748 0.13459 12 0.38745 0.33619 0.78549 0.74356 0.70138 066178 0.62460 0.58966 0.55654 0.52595 0.49097 0.44401 0_39711 0.35553 0.31863 0.28584 0.25668 0.11216 13 087866 082403 0.77303 0.72542 0.68095 0.63940 0.50057 0.56427 0.53032 0.49856 0.46554 0.41496 0.36770 0.32615 0.25966 0.25751 0.22917 0.09346 14 0.36996 0.31155 0.75758 0.70773 0.66112 0.61778 0.5774 0.53997 0.5OSOT 0.47257 0.44230 0.38752 0.34046 0.29925 0.26333 0.23199 0.20462 0.07789 15 036135 0.79955 0.74301 0.69047 0.54186 0.59689 0.55526 0.51672 0.48102 0.44793 0.41727 0.36345 0.31524 0.27454 0.29999 0.20900 0.13270 006491 16 085282 078903 6.72545 0.67362 0.62317 0.57671 0.53391 0.45447 0.45811 0.43458 0.39365 0.33873 0.29189 0.25187 0.21763 0.15829 0.16312 0.05409 17 034438 0.77639 0.71416 0.65720 0.002 0.55720 0.51337 0.47318 0.43630 0.40245 0.37136 0.31657 0_27027 0.23107 0.19734 0.16963 0.14564 0.04507 15 03:3602 0.76491 070016 0.64117 0.58739 0.53836 049363 0.45280 0.41552 0.38147 0.35034 0.29556 0.25025 0.21199 0.17986 0.15282 0.13004 0.01756 19 0.82774 0.75361 0.68643 0.62553 0.57029 0.52016 0.47464 0.43330 0.39573 0.36155 0.33051 0.27651 0.23171 0.19449 0.16351 0.13768 0.11611 0.03130 20 031954 0.74247 0.67297 0.61027 0.55368 0.50257 0.45639 0.41464 0.337699 0.34273 031150 0.25342 0.21455 0.17343 0.14364 0.12403 0.10367 0.02005 21 0.81143 0.731.50 0.65973 0.59539 0.53755 0.45557 0.43883 0.39679 0235894 032456 0.29416 0.24151 0.19566 0.16370 0.13513 0.11174 0.09256 0.02174 24 0.78757 0.69954 0.62172 0.55288 0.49193 0.43796 0.39012 0.34770 031007 0.27666 0.24098 0.19715 0.15770 0.12640 0.10153 0.08170 0.06588 0.01258 25 0.77977 0.68921 0.60953 0.53939 0.47761 0.42315 0.37512 0.33273 0.29530 0.26223 0.233000.18425 0.14602 0.11597 0.09230 0.07361 0.05882 0.01048 28 0.75684 0.65910 0.57437 0.50088 0.43708 038165 0.33348 029157 025509 0.22332 0.19563 0.15040 0.11591 0.08955 0.06934 0.05382 0.04187 0.00607 >> 0.74934 0.64936 0.56311 0.48366 0.43435 036875 0.32065 0.279020_24295 0.21168 0.18456 0.14056 0.10733 0.08215 0.06304 0.04349 0.03738 0.00506 30 0.74192 0.63976 0.55207 0.47674 0.41199 035638 0.30832 0.26700023138 0.20064 0.17411 0.13137 0.69938 0.07537 0.05731 0.04368 0.03338 0.00421 31 0.73458 0.61031 0.54125 0.46511 0.39999 0.34423 0.29646 0.25550 0.22036 0.19018 0.16425 0.12277 0.09202 0.06915 0.05210 0.03935 0.02900 0.00351 40 0.67165 0.55126 0.45289 037243 030656 0.25257 0.20819 0.17193 0.14205 0.11746 0.09722 0.06678 0.04603 0.03184 0.02209 0.01538 0.01075 0.00068 TABLE 6 6 Present Value of an Annuity Due of $1 1 1 (1+1) PVAD = (1+i) i 7/1 2.0% 2.5% 6.0% 1 1.00000 1.98039 1.00000 1.97561 1.00000 1.94340 1.0% 1.5% 1.00000 1.00000 1.99010 1.98522 297040 2.95588 3.94099 3.91220 4.90197 4.85438 5.0% 5.5% 1.00000 1.00000 1.95238 1.94787 2.85941 2.84632 % 3.0% 3.5% 4.0% 4.5% 1.00000 1.00000 1.00000 1.00000 1.97087 1.96618 1.96154 1.95694 2.91347 2.89969 2.88609 2.87267 3.82861 3.80164 3.77509 3.74896 4.71710 4.67308 4.62990 4.58753 2 7.0% 8.0% 9.0% 1.00000 1.00000 1.00000 1.93458 1.92593 1.91743 2.80802 2.78326 2.75911 10.0% 11.0% 12.0% 20.0% 1.00000 1.00000 1.00000 1.00000 1.90909 1.90090 1.89286 1.83333 2.73554 2.71252 2.69005 2.52778 3.48685 3.44371 3.40183 3.10648 4.16987 4.10245 4.03735 3.58873 3 2.94156 2.92742 2.83339 4 3.88388 3.85602 3.72325 3.69793 3.67301 3.62432 3.57710 3.53129 5 4.80773 4.76197 4.54595 4.50515 4.46511 4.38721 4.31213 4.23972 6 5.85343 5.78264 5.71346 5.64583 5.57971 5.32948 5.27028 5.21236 5.10020 7 6.79548 6.69719 6.60143 6.50813 6 6.41719 6.07569 5.99553 5.91732 5.76654 4.99271 4.88965 5.62288 5.48592 6.20637 6.03295 8 7.72819 7.59821 7.47199 7.34939 5.51505 5.45182 5.38998 6.32855 6.24214 6.15787 7.11454 7.00205 6.89270 7.87396 7.73274 759589 8.607698.43533 8.26879 6.78637 6.68297 6.58238 6.38929 4.79079 4.69590 4.60478 3.99061 5.35526 5.23054 5.111414.32551 5.868425.71220 5.56376 4.60459 6.33493 6.14612 5.967644.83716 6.75902 6.53705 6.328255.03097 9 8.65168 8.48593 7.23028 8.01969 8.78611 8.32548 8.17014 8 7.46321 7.20979 6.97130 6.74664 6.53482 7.33457 7.95220 10 9.56602 9.36052 9.16224 8.97087 8.10782 7.80169 7.51523 7.24689 6.99525 9.31661 8.02358 7.71008 7.41766 8.49867 8.13896 7.80519 13 11 10.47130 10.22218 9.98259 9.75206 9.53020 9.11090 8.91272 8.72173 8.53763 8.36009 12 11.36763 11.07112 10.78685 10.51421 10.25262 10.00155 9.76048 9.52892 9.30641 9.09254 8.88687 12.25508 11.90751 11.57534 11.25776 10.95400 10.66333 10.38507 10.11858 9.86325 9.61852 9.38384 14 13.13374 12.73153 12.34837 11.98318 11.63496 11.30274 10.98565 10.68285 10.39357 10.11708 9.85268 15 14.00370 13.54338 13.10625 12.69091 12.29607 11.92052 11.56312 11.22283 10.89864 10.58965 10.29498 8.94269 8.53608 8.16073 7.14457 6.88923 6.650225.19247 7.49506 7.20652 6.93770 5.32706 7.813697.49236 7.19437 5.43922 8.10336 7.74987 7.42355 5.53268 8.36669 798187 7.62817 5.61057 9.35765 8.90378 8.48690 9.74547 9.24424 8.78615 16 14.86505 14.34323 13.84926 13.38138 12.93794 12.51741 12.11839 11.73955 11.37966 11.03758 10.71225 10.10791 9.55948 9.06069 17 15.71787 15.13126 14.57771 14.05500 13.56110 13.09412 12.65230 12.2340211.83771 11.46216 11.10590 10.44665 9.85137 9.31256 18 16.56225 15.90765 15.29187 14.71220 14.16612 13.65132 13.16567 12.70719 12.27407 11.86461 11.47726 10.76322 10.12164 11.47726 10.76322 10.12164 9.54363 1917.39827 16.67256 15.99203 15.35336 14.75351 14.18968 13.65930 13.15999 12.68959 12.24607 11.82760 11.05909 10.37189 9.75563 11.82760 20 18.22601 17.42617 16.67846 15.97889 15.32380 14.70984 14.13394 13.59329 13.08532 12.60765 12.15812 11.33560 10.60360 9.95011 8.60608 8.19087 7.81086 5.67547 8.82371 8.37916 7.973995.72956 9.02155 8.54879 8.11963 5.77463 9.20141 8.70162 8.24967 5.81219 9.36492 8.83929 8.36578 5.84350 21 19.04555 18.16864 17.35143 16.58916 15.87747 15.21240 14.59033 14.00794 13.46221 12.95038 12.46992 11.59401 10.81815 10.12855 9.51356 8.96333 8.469445.86958 25 22.24339 21.03041 19.91393 18.88499 17.93554 17.05837 16.24696 15.49548 14.79864 14.15170 14.15170 13.55036 12.46933 11.52876 10.70661 9.98474 9.34814 8.78432 5.93710 30 26.06579 24.37608 22.84438 21.45355 20.18845 19.03577 17.98371 17.02189 16.14107 15.33310 14.59072 13.27767 12.15841 11.19828 10.36961 10.36961 9.65011 9.02181 5.97472 40 33.16303 30.36458 27.90259 25.73034 23.80822 22.10250 20.58448 19.22966 18.01704 16.92866 15.94907 14.26493 12.87858 11.72552 10.75696 993567 9.23303599592