On December 31, 2019, Pharoah Company leased machinery from Terminator Corporation for an agreed upon lease term of 3 years. Pharoah agreed to make annual lease payments of $17,500, beginning on December 31, 2019. The expected residual value of the machinery at the end of the lease term is $8,750, though Pharoah does not guarantee any residual value to Terminator. What amount will Pharoah record as its lease liability on December 31, 2019, if its incremental borrowing rate is 7% and the implicit rate of the lease is unknown? (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.)