Brief Exercise 15-14 (Algo) Residual value sales-type lease [LO15-2, 15-3, 15-6]

On January 1, James Industries leased equipment to a customer for a four-year period, at which time possession of the leased asset will revert back to James. The equipment cost James $870,000 and has an expected useful life of six years. Its normal sales price is $870,000. The residual value after four years is $270,000. Lease payments are due on December 31 of each year, beginning with the first payment at the end of the first year. The interest rate is 5%. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate 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.)