Each of the independent situations below describes a finance lease in which annual lease payments are payable at the beginning of each year. The lessee is aware of the lessor's implicit interest rate.

Situation

1 Lessee 2 Lessor

Lease term 10yrs. 20yrs.

Lessor's desired

rate of return 10% 12%

Lessee's incremental

borrowing rate 12% 10%

Fair value of asset $600,000 $400,000

For convenience, here are some table values:

Periods; int. rate PV, ordinary annuity PV, annuity due

10 periods, 10% 6.1446 6.7590

10 periods, 12% 5.6502 6.3283

20 periods, 10% 8.5136 9.3649

20 periods, 12% 7.4694 8.3658

Required:

For each situation determine the amount of the annual lease payment, as calculated by the lessor.Round your answers to the nearest whole dollar amounts.

Annual lease payment:

Situation 1:____________________

Situation 2:____________________