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Each of the independent situations below describes a finance lease in which annual lease payments are payable at the beginning of each year . The

  1. 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 10 years 20 years
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; interest 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: [3 points for each situation]For each situation determine the amount of the annual lease payment, as calculated by the lessor. Note: Round your answers to the nearest whole dollar amounts.

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