Each of the four independent situations below describes a direct financing lease in which annual lease payments of $175,000 are payable at the beginning of each year. Each is a capital lease for the lessee. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)

Value 15.00 points Each of the four independent situations below describes a direct financing lease in which annual lease payments of $175,000 are payable at the beginning of each year. Each is a capital lease for the lessee. (FV of $1, PW of $1, FNA of $1, PNA of $1, FNAD of $1 and PVAD of$1) (Use appropriate factor(s) from the tables provided.) Situation Lease term (years) Lessor's and lessee's discount rate 10% 12% 11 11% Residual value Guaranteed by lessee 0 $87,500 0 $55,000 Unguaranteed $87,500 $120,000 Determine the following amounts at the inception of the lease Answer is complete but not entirely correct Situation A The lessor's 1,400,000 V 1,487,500 1,575,000 1,630,000 1. Minimum lease payments 1,400,000 1,487,500 1,662,500 V 1,750,000 V 2. Gross investment in the lease 400x 904,750X 1,003,188X 1,037 3. Net investment in the lease 933,625X B The lessee's 1,400,000 1,487,500 1,575,000 1.630.000 4. Minimum lease payments 933,625X 968,975X 990,480X 5. Leased asset 904,750X 869,400X 6. Lease liability 933,625X 968,975X 968,975X