Iman Iron Works signed a lease on January $1$ with Borko Bank for an iron$-$stamping machine. The equipment is not specialized in

nature. The lease has a $12-$year term with no purchase option or transfer of ownership. Under the terms of the contract, Iman must pay

$$3,500$ on January $1$ of each year. Borko Bank's implicit rate is $12\%.$ The iron$-$stamping machine has an economic life of $25$ years and a

fair value of $$35,000.$ If Iman borrowed at Borko Bank, the loan would carry an interest rate of $14\%.$ The lessee knows the implicit rate.

Is this contract an operating or a finance lease for the lessee?

Future Value of $$1$ table Future Value of an Ordinary Annuity table Future Value of an Annuity Due table

Present Value of $$1$ table Present Value of an Ordinary Annuity table Present Value of an Annuity Due table

Before completing the requirement, identify the present value of the lease payments. $($Use the present value and future value tables, the

formula method, a financial calculator, or a spreadsheet for your calculation. If using present and future value tables or the

formula method, use factor amounts rounded to five decimal places, X$.$XXXXX$.$ Round your final answer to the nearest whole dollar.$)$

The present value $($PV$)$ of the payments due under the lease is