3. BPO: Lucas, Inc. enters into a direct-financing lease agreement as lessor on January 1, 2015, to lease an airplane to National Airlines. The term of the noncancelable lease is eight years and payments are required at the beginning of each year. The following information relates to this agreement:

a) National Airlines has the option to purchase the airplane for $12,000,000 when the lease expires at which time the fair value is expected to be $20,000,000.

b) The airplane has a value of $51,000,000 to Lucas, an estimated useful life of fourteen years, and a salvage value of zero at the end of that time (due to technological obsolescence).

c) National Airlines will pay all executory costs related to the leased airplane.

d) Interest rate is 8% per year.

e) Collectibility of the payments is reasonably predictable, and there are no important uncertainties surrounding the costs yet to be incurred by Lucas.

Required: Determine the amount of periodic rental payments as required by lessor