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Guaranteed and Unguaranteed Residual Values

Grygiel Company leases a nonspecialized machine with a fair value of $50,000 to Baker Company. The lease has a life of 6 years and requires a $7,500 payment at the end of each year. The lease does not include a transfer of ownership nor a bargain purchase option, and the life of the lease is less than a major part of the expected economic life of the machine. It is probable that Grygiel will collect the lease payments plus any amount necessary to satisfy a residual value guarantee. Round intermediate and final answers to the nearest dollar.

Required:

1. If the interest rate implicit in the lease is 10%, compute the machines expected residual value. $__________