On January 1, 2019, Vinson signed an agreement to operate as a franchisee of Rapid Copy Service Inc. for an initial franchise fee of $83,000. Of this amount, $23,000 was paid when the agreement was signed, and the balance is payable in 4 annual payments of $15,000 each beginning January 1, 2020. The agreement provides that the down payment is not refundable and no future services are required of the franchisor. The present value at January 2, 2019, of the 4 annual payments discounted at 15% (the implicit rate for a loan of this type) is $42,800. The agreement also provides that 5% of the revenue from the franchise must be paid to the franchisor annually. Vinson's revenue from the