Baldwin Corp signed a 3 year noncancelable lease for certain machinery on Dec 31, 2018. The terms of the lease called for Baldwin Corp to make equal annual payments of $14400 at the end of each year for 3 years, withtitle to pass to Baldwin Corp at the end of this period. The first payment is made one year after the lease is signed on Dec 31, 2018. The machinery has an estimated useful life of 3 years and no salvage value. Baldwin Corp uses the straight-line method of depreciation for all of its fixed assets. The effective interest rate for the lease was 696. Income Statement For: 2019 Operating Income: 119,232 Earnings from affiliates: 0 Earnings Beore Interest and Taxes: 119,232 Interest expense: 4,950 Earnings before Taxes: 114,282 Provision for Taxes on Income: 31,999 Net income: 82,283 The company had initially accounted for the lease as an operating lease and the figures above were produced using that assumption. Later the company decided to account for the lease as a capital lease. With the lease accounted for as a capital lease, the Times Interest Earned Ratio for 2019 is: Periods: Present value at 6% | 1:0.9434|| 2:0.89 3:0.83964: 0.7921|| 5:0.7473 16:0.705 17:0.6651 || 8: 0.6274 Periods: Present value Annuity at 6% | 1:0.9434|| 2:1.8334 | 3:2.673|| 4:3.4651 || 5:4.2124 16:4.9174 | 7:5.5825 || 8:6.2099 O 119232/7259 119232 / 2309 119232/4950 132062 / 7259 132062 / 2309 132062 / 4950 120802/7259 120802 / 2309 120802 / 4950