E21-1 (LOI,4) (Lessee Entries; Finance Leas Inc. to lease a car on December 31, 2016. The following information e with No Residual Value) DU Journeys enters into an agreement with Traveler relates to this agreement The term of the non-cancelable lease is 3 years with no renewal or bargain purchase option. of the car is 3 years, and it is expected to have no residual value at the end of the lease 1. term. 2. The fair value of the car was $15,000 at commencement of the lease. 3. Annu al payments are required to be made on December 31 at the end of each year of the lease, beginning December 31, 2017. The fi rst payment is to be of an amount of $5,552.82, with each payment increasing by a constant rate of 5% from the previous payment (i.e., the second payment will be $5,830.46 and the third and final payment will be $6,121.98) 4. DU Jou 5. DU Journeys uses straight-line depreciation for all similar cars. rneys, incremental borrowing rate is 8%. The rate implicit in the lease is unknown