On December 31, 20X5, Neal, Inc. leased machinery with a fair value of $105,000 from Frey Rentals Co. The agreement is a 6-year noncancelable lease requiring annual payments of $20,000 beginning December 31, 20X5. The lease is appropriately accounted for by Neal as a finance lease. Neal's incremental borrowing rate is 11%. Neal knows the interest rate implicit in the lease payments is 10%.

The present value of an annuity due of $1 for 6 years at 10% is 4.7908.

The present value of an annuity due of $1 for 6 years at 11% is 4.6959.

In its December 31, 20X5 balance sheet, Neal should report a lease liability of...

Group of answer choices

$95,816

$93,918

$75,816

$85,000