On January 1, 2021, Pharoah Ltd., which uses IFRS 16, entered into an eight-year lease agreement for a conveyor machine. Annual lease payments are $34,200 at the beginning of each lease year, which ends December 31, and Pharoah made the first payment on January 1, 2021. At the end of the lease, the machine will revert to the lessor. However, conveyor machines are expected to last for only eight years and have no residual value. At the time of the lease agreement, conveyor machines could be purchased for $196,000 cash. Equivalent financing for the machine could have been obtained from Pharoahs bank at 11%. Pharoahs fiscal year coincides with the calendar year. Pharoah uses straight-line depreciation for its conveyor machines.

Calculate the PV of the minimum lease payments using (1) a financial calculator or (2) Excel functions. (Round factor values to 5 decimal places, e.g. 1.25124 and final answers to 0 decimal places, e.g. 1,452.)

Present value of the minimum lease payments

$Enter your answer in accordance to the question statement