Larkspur Inc. wishes to lease machinery to Thiensville Company. Thiensville wants the machinery for 4 years, although it has a useful life of 10 years. The machinery has a fair value at the commencement of the lease of $58,000, and Larkspur expects the machinery to have a residual value at the end of the lease term of $28,000. However, Thiensville does not guarantee any part of the residual value. Thiensville does expect that the residual value will be $56,000 instead of $28,000. What would be the amount of the annual rental payments Larkspur demands of Thiensville, assuming each payment will be made at the end of each year and Larkspurwishes to earn a rate of return on the lease of 5%? (For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answer to 0 decimal places, e.g. 5,275.)

1. Amount of the annual lease payments =