Carla Vista Company leases a machine from Vollmer Corp. under an agreement which meets the criteria to be a capital lease for Carla Vista. The 6-year lease requires payment of $177000 at the beginning of each year, including $25700 per year for maintenance, insurance, and taxes. The incremental borrowing rate for the lessee is 11%; the lessor's implicit rate is 9% and is known by the lessee. The present value of an annuity due of 1 for six years at 11% is 4.69590. The present value of an annuity due of 1 for six years at 9% is 4.88965. Carla Vista should record the leased asset at

$739804.

$710490.

$865468.

$831174.