Exercise 21-1 (Part Level Submission)

On January 1, 2014, Burke Corporation signed a 7-year noncancelable lease for a machine. The terms of the lease called for Burke to make annual payments of $9,882 at the beginning of each year, starting January 1, 2014. The machine has an estimated useful life of 8 years and a $4,800 unguaranteed residual value. The machine reverts back to the lessor at the end of the lease term. Burke uses the straight-line method of depreciation for all of its plant assets. Burkes incremental borrowing rate is 11%, and the lessors implicit rate is unknown.

Compute the present value of the minimum lease payments. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 58,971.)