Laura Leasing Company signs an agreement on January 1, 2017, to lease equipment to Sage Hill Company. The following information relates to this agreement. 1. 2. 3. The term of the non-cancelable lease is 3 years with no renewal option. The equipment has an estimated economic life of 5 years The fair value of the asset at January 1, 2017, is $78,000. The asset will revert to the lessor at the end of the lease term, at which time the asset is expected to have a residual value of $6,000, none of which is guaranteed. 4. The agreement requires equal annual rental payments of $25,178 to the lessor, beginning on January 1, 2017 5. The lessee's incremental borrowing rate is 5%. The lessor's implicit rate is 490 and is unknown to the lessee. 6. Sage Hill uses the straight-line depreciation method for all equipment. (For calculation purposes, use 5 decimal places as displayed in the factor table provided.)