Crane Company manufactures a check-in kiosk with an estimated economic life of 12 years and leases it to Cheyenne Airlines for a period of 10 years. The normal selling price of the equipment is $291,033, and its unguaranteed residual value at the end of the lease term is estimated to be $20,800. Cheyenne will pay annual payments of $43,400 at the beginning of each year. Crane incurred costs of $164,300 in manufacturing the equipment and $4,300 in sales commissions in closing the lease. Crane has determined that the collectibility of the lease payments is probable and that the implicit interest rate is 11%. Cheyenne Airlines has an incremental borrowing rate of 11%. Click here to view factor tables.

(a)

Discuss the nature of this lease in relation to the lessee. This is a operating leasesales-type leasefinance lease. Compute the amount of the initial lease liability. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 58,971.)

The amount of the initial lease liability

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