Ivanhoe Steel Corporation, as lessee, signed a lease agreement for equipment for five years, beginning January 31, 2020. Annual rental payments of $42,000 are to be made at the beginning of each lease year (January 31). The insurance and repairs and maintenance costs are the lessee's obligation. The interest rate used by the lessor in setting the payment schedule is 9%; Ivanhoe's incremental borrowing rate is 10%. Ivanhoe is unaware of the rate being used by the lessor. At the end of the lease, Ivanhoe has the option to buy the equipment for $4,600, which is considerably below its estimated fair value at that time. The equipment has an estimated useful life of seven years with no residual value. Ivanhoe uses straight-line depreciation on similar equipment that it owns, and follows IFRS 16. Click here to view the factor table PRESENT VALUE OF 1. Click here to view the factor table PRESENT VALUE OF AN ANNUITY DUE. Part 1 Using time value of money tables, a financial calculator, or Excel functions, calculate the PV of the lease obligation. (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to O decimal places, e.g. 5,275.) Present value $