DmIssion) Winston Industries and Ewing Inc. enter into an agreement that requires Ewing Inc. to build three diesel-electric engines to Winston's specifications. Upon completion of the engines, Winston has agreed to lease them for a period of 10 years and to assume all costs and risks of ownership. The lease is noncancelable, becomes effective on January 1, 2014, and requires annual rental payments of $419,076 each January 1, starting January 1 2014 Winston's incremental borrowing rate is 11%. The implicit interest rate used by Ewing Inc. and known to Winston is 8%. The total cost of building the three engines is $2,500,000. The economic life of the engines is estimated to be 10 years, with residual value set at zero. Winston deprecis similar equipment on a straight-line basis. At the end of the lease, Winston assumes title to the engines. Collectibility of the lease payments is reasonably certain; no uncertainties exist relative to unreimbursable lessor costs. 1.91743 2.75911 1.80090 .88280 2.78326 2.73664 3.44371 4.10245 4.03738 99271 6 20637 1245e 7.71008 523054 6.03296 6.53482 5.88842 6 33493 8.75902 5.16042 548733 7.90519 7.49608 7.81300 5.13800 6.93770 6 23371 7.74967 7.42355 955948 985137 0.12164 0.37189 7.81088 7.97399 9,00089 882371 9.02155 837916 854879 8.70162 9.7553 8.36578 7.19623 10.12856 10.44243 10.70001 920043 11.52876 8.84314 8.89568 7.48415 7.49060 1.80998 10.92897 10.16095 9 48006 0.30687 12.06108 12.16841 11.11013 11.19828 7.53361 7.55088 .80102 .58508 12.43500 12 51389 976800 80054 1.40824