On January 1, 2017, Wood Corporation leases a piece of equipment from Prior Corporation and properly accounts for the equipment as a finance lease. Under the agreement, Wood will make 10 annual payments of $700,000 each January 1st. At the end of 10 years, Wood has the option of buying the equipment for $100,000, when the estimated fair value will be $400,000. If Wood's incremental borrowing rate is 6%, what is the present value of the minimum lease payments?

4,820,374.44

None of the above

5,517,024.07

5,207,900.41

On January 1, 2017, Wood Corporation leases a piece of equipment from Prior Corporation and properly accounts for the equipment as a capital lease. Under the agreement, Wood will make 10 annual payments of $386,000 each January 1st. At the end of 10 years, Wood has the option of buying the equipment for $20,000, when the estimated fair value will be $400,000. If Wood's incremental borrowing rate is 6%, what is the present value of the minimum lease payments?

3,011,453.22

2,852,161.50

3,022,621.11

None of the above