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Larkspur Company leases an automobile with a fair value of $$20,991$ from Matthew Motors, Inc., on the following terms.

Non$-$cancelable term of $50$ months.

Rental of $$440$ per month $($at the beginning of each month$).($The present value at $0\mathrm{.}5\%$ per month is $$19,520.)$

Larkspur guarantees a residual value of $$1,330($the present value at $0\mathrm{.}5\%$ per month is $$1,036).$ Larkspur expects the probable residual value to be $$1,330$ at the end of the lease term.

Estimated economic life of the automobile is $60$ months.

Larkspur's incremental borrowing rate is $6\%$ a year $(0\mathrm{.}50\%$ a month$).$ Matthew's implicit rate is unknown.

$($g$)$

Suppose that instead of $$1,330,$ Larkspur expects the residual value to be only $$500($the guaranteed amount is still $$1,330).$ How does the calculation of the present value of the lease payments change from part $($b$)?($Round answer to $0$ decimal places, e$.$g$.5,275.)$

PV of lease payments $

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