On 1 July 2018, Company Z leased a vehicle from Company W. The vehicle cost W $22,065.3, considered to be its fair value on that same day. The lease term is 2 years, starting on 1 July 2018. Annual lease Payment, payable on 30 June each year is $7,000. Estimated useful life the Vehicle is 5 years. Estimated Residual Value of the vehicle at the end of the lease is $12,000. Residual Value Guaranteed by Company Z is 9,000. Interest rate implicit in the lease is 10%.

Present value of an annuity: PVIFA (T2, 10%, 2Y) = 1.7355. Present value of $1: PVIF (T1, 10%, 2Y) = 0.8264. Based on this information required the PV of the lease payment by company Z (lessee) at 1 July 2018 will be:

Select one:

a.$19,196.1

b.$19,586.1

c.$22,065.3

d.$22,189.3