On January 1, 2010, Milk Incorporated leased a machine to a customer for a period of six year, after which possession of leased asset will revert back to Milk. The machine costs P800,000 with an expected useful life of eight years. The machine would normally sell for P800,000.

The residual value after six years is P125,000, guaranteed by the lessee. Accordingly, lease payments are due on December 31 of each year, with the first payment at the end of 2010.

Assuming an interest rate of 5%, calculate the amount of annual lease payments. Round off final answer to nearest peso.