Haystack, Inc., manufactures machinery used in the mining industry. On January 2, 2016, it leased equipment with a cost of $400,000 to Silver Point Co. The 5-year lease calls for a 10% down payment and equal annual payments at the end of each year. The equipment has an expected useful life of 5 years. If the selling price of the equipment is $650,000, and the rate implicit in the lease is 8%, what are the equal annual payments?

PV Annuity Due PV Ordinary Annuity PV Single Sum 8%, 5 periods 4.31213 3.99271 .68508 10%, 5 periods 4.16986 3.79079 .62092

a $146,517

b $135,662

c $151,644

d $162,796