On December 29, 20X4, Action Corp. signed a 7-year finance lease for an airplane to transport its sports team around the country. The airplane's fair value was $841,500. Action made the first annual lease payment of $153,000 on December 31, 20X4. Action's incremental borrowing rate was 12%, and the interest rate implicit in the lease, which was known by Action, was 9%.

The following are the rounded present value factors for an annuity due:

9% for 7 years

5.5

12% for 7 years

5.1

What amount should Action report as lease liability in its December 31, 20X4 balance sheet?

$780,300

$688,500

$627,300

$841,500