Exercise 21-03 (Part Level Submission) Metlock Company leases an automobile with a fair value of $16,767 from John Simon Motors, Inc., on the following terms: 1. 2. 3. 4. Non-cancelable term of 50 months. Rental of $350 per month (at the beginning of each month). (The present value at 0.5% per month is $8,873.) Metlock guarantees a residual value of $1,170 (the present value at 0.5% per month is $920). Delaney expects the probable residual value to be $1,170 at the end of the lease term. Estimated economic life of the automobile is 60 months. Metlock's incremental borrowing rate is 6% a year (0.5% a month). Simon's implicit rate is unknown. 5. Click here to view factor tables. (For calculation purposes, use 5 decimal places as displayed in the factor table provided.) (b) Your answer is correct. What is the present value of the lease payments to determine the lease liability? (Round answer to 0 decimal places, e.g. 5,275.) Present value of the lease payments 15527 (9) x Your answer is incorrect. Try again. Suppose that instead of $1,170, Metlock expects the residual value to be only $500 (the guaranteed amount is still $1,170). How does the calculation of the present value of the lease payments change from part (b)? (Round answer to o decimal places, e.g. 5,275.) PV of lease payments 16439