Headland Inc. manufactures an X$-$ray machine with an estimated life of $12$ years and leases it to Sage Medical Center for a period of $10$

years. The normal selling price of the machine is $$528,109,$ and its guaranteed residual value at the end of the non$-$cancelable lease

term is estimated to be $$15,000.$ The hospital will pay rents of $$64,000$ at the beginning of each year. Headland incurred costs of

$$263,000$ in manufacturing the machine and $$14,200$ in legal fees directly related to the signing of the lease

determined that the collectibility of the lease payments is probable and that the implicit interest rate is $5\%.$ Sage Medical Center has

an incremental borrowing rate of $5\%$ and an expected residual value at the end of the lease of $$10,000.$

Discuss the nature of this lease in relation to the lessee.

The nature of this lease in relation to the lessee is

Compute the amount of the initial lease liability. $($Round present value factor calculations to $5$ decimal places, e$.$g$.1\mathrm{.}25124$ and the final

answer to $0$ decimal places e$.$g$.5,275.)$

Initial Lease Liability $