For each of the three independent situations below determine the amount of the annual lease payments. Each describes a finance lease in which annual lease payments are payable at the beginning of each year. Each lease agreement contains an option that permits the lessee to acquire the leased asset at an option price that is suffi- ciently lower than the expected fair value that the exercise of the option appears reasonably certain. on Situation 3 Lease term (years) Lessor's rate of return 2 5 11% 12% 9% $60,000 $420,000 $185,000 Lessor's cost of leased asset $50,000 $420,000 $145,000 Fair value of leased asset Purchase option: $10,000 $50,000 22,000 Exercise price Exercisable at end of year: Reasonably certain? 5 5 yes no yes