Calculate the annual lease payments due from the lessor, and prepare lease amortization schedule, for each of the following scenarios:

Scenario

A B C

Lease Term 10 Years 20 Years 4 Years

Fair Value of Lease Asset $600,000 $700,000 $100,000

Lesse's Incremental Borrowing Rate 12% 10% 10%

Lessor's Rate of Return (known by lessee) 11% 9% 12%

Payment Due End of Year End of Year End of Year