On January 1, 2018, Sauder Corporation (lessee) signed a five-year non-cancelable lease for equipment. The terms of the lease called for Sauder to make annual payments of $150,000 at the beginning of each year for five years starting on January 1, 2018.

The equipment has an estimated useful life of 7 years and an expected residual value of $20,000. Sauder guaranteed a residual value of $35,000.

Sauder uses the straight-line method of depreciation for all of its fixed assets.

Sauder accordingly accounts for this lease transaction as a finance lease and its rate of returns is 12%.

(round up to nearest $1)

On January 2018, Sauder records the present value for the lease liability of ...............