Lease $A-$

The fair value of the equipment is $$800,000$ at the inception of the lease.

The lease term is $5$ years, and there is a $3-$year renewal term at the option of the lessor.

Annual lease payments are $$145,000$ per year for the first $5$ years and $$100,000$ for the next $3$ years.

Payments are due at the

beginning of each lease year.

All lease payments include the cost of insurance, estimated at $$15,000$ per year.

The lessee has a residual guarantee value of $$40,000$ at the end of the $8$ th year.

The lessee does not know the lessor's implicit rate of interest in the lease.

The lessee's incremental borrowing rate is $8\%.$

Calculate the present value of the right$-$of$-$use assets