On January 1, 2018, SJGE Company leases a fleet of stock delivery vehicles from Novak Motors, Inc

Requirement a. Compute the annual rent payment needed to ensure that the lessor company recovers the fair value of the vehicles. (Use the present value and future value tables, the formula method, a financial calculator, or a spreadsheet for your calculation. If using present and future value tables or the formula method, use factor amounts rounded to five decimal places, X.XXXXX. Round your final answer to the nearest whole dollar.)

Requirement b. Compute the present value of the lease payments using this new payment (exclude the guaranteed residual value from this part of the problem) (Use the present value and future value tables, the formula method, a financial calculator, or a spreadsheet for your calculation. If using present and future value tables or the formula method, use factor amounts rounded to five decimal places, X.XXXXX. Round your final answer to the nearest whole dollar.)

Requirement c. Prepare the amortization table required for the entire term. Use the new payment and guaranteed residual value.

Under the terms of the lease, SJGE must pay $40,000 on January 1 of each year, beginning on January 1, 2018, over a 4-year term. The delivery vehicles have a useful life of 4 years. SJGE depreciates similar vehicles that it owns using the straight-line method.

SJGE's incremental borrowing rate is 10%, and the 4%

implicit rate in the lease is known to the lessee. The vehicles cost

Novak Motors $150,000 and have a fair value of $151,004.

Novak has no uncertainties as to future costs and collection. The lease terms do not contain a transfer of ownership, and there is no purchase option. The lease contains a guaranteed residual value of $16,000.

The lessee guarantees the residual value. Assume that there are neither initial direct costs nor nonlease components related to the lease agreement.