Ankor, a lessee, enters into a lease of a building with an initial noncancelable term of 10 years and an option to extend for an additional five years (at commencement, deemed not reasonably certain to exercise). Fixed lease payments are $50,000 per year during the initial noncancelable term and $55,000 per year during the optional five year period. In connection with the lease, Ankor will receive a cash payment of $10,000 as an incentive six months after lease commencement.

What is the lease term and the lease payments?

Select one:

a.15 years; $765,000

b.15 years; $775,000

c.None of these are correct

d.10 years; $500,000

e.10 years, $490,000