Metlock Company is negotiating to lease a piece of equipment to Ivanhoe, Inc. Ivanhoe requests that the lease be for $9$ years. The equipment has a useful life of $10$ years. Metlock wants a guarantee that the residual value of the equipment at the end of the lease is at least $$4,000.$ Ivanhoe agrees to guarantee a residual value of this amount though it expects the residual value of the equipment to be only $$2,000$ at the end of the lease term.

If the fair value of the equipment at lease commencement is $$105,000,$ what would be the amount of the annual rental payments Metlock demands of Ivanhoe, assuming each payment will be made at the beginning of each year and Metlock wishes to earn a rate of return on the lease of $10\%?($For calculation purposes, use $5$ decimal places as displayed in the factor table provided and round final answer to $0$ decimal places, e$.$g$.5,275.)$

Click here to view factor tables.

Amount of equal annual lease payments

$Explain how to solve step by step using BA II Plus calculator