Hayley, Inc. manufactures machinery used in the mining industry. On January 2, 2018, it leased equipment with a cost of $200,000.

The 5-year lease calls for an equal annual payment at the beginning of each year.

The equipment has an expected useful life of 5 years.

If Hayley set the present value of the five lease payments at $292,500, which is 100% of the fair value of the machinery, and the rate implicit in the lease is 8%, what are the equal annual payments?

PV Annuity Due PV Ordinary Annuity

8%, 5 periods 4.31213 3.99271

Select one:

a.

$75,822

b.

$67,831

c.

$73,259

d.

$81,398