On January 1, 2021, Yancey, Inc. signs a 10-year noncancelable lease agreement to lease a storage building from Holt Warehouse Company. Collectibility of lease payments is reasonably predictable and no important uncertainties surround the amount of costs yet to be incurred by the lessor. The following information pertains to this lease agreement. (a) The agreement requires equal rental payments at the beginning each year. (b) The fair value of the building on January 1, 2021 is $6,000,000; however, the book value to Holt is $4,950,000. (c) The building has an estimated economic life of 10 years, with no residual value. Yancey depreciates similar buildings using the straight-line method. (d) At the termination of the lease, the title to the building will be transferred to the lessee. (e) Yancey's incremental borrowing rate is 11% per year. Holt Warehouse Co. set the annual rental to insure a 10% rate of return. The implicit rate of the lessor is known by Yancey, Inc. (f) The yearly rental payment includes $15,000 of executory costs related to taxes on the property. Period 1 2 3 4 5 6 7 8 9 10 Future Value of Ordinary Annuity of 1 5% 6% 8% 10% 1.00000 1.00000 1.00000 1.00000 2.05000 2.06000 2.08000 2.10000 3.15250 3.18360 3.24640 3.31000 4.31013 4.37462 4.50611 4.64100 5.52563 5.63709 5.86660 6.10510 6.80191 6.97532 7.33592 7.71561 8.14201 8.39384 8.92280 9.48717 9.54911 9.89747 10.63663 11.43589 11.02656 11.49132 12.48756 13.57948 12.57789 13.18079 14.48656 15.93743 12% 1.00000 2.12000 3.37440 4.77933 6.35285 8.11519 10.08901 12.29969 14.77566 17.54874 Period 1 2 3 4 5 6 7 8 9 10 Present Value of an Annuity Due of 1 5% 6% 8% 10% 1.00000 1.00000 1.00000 1.00000 1.95238 1.94340 1.92593 1.90909 2.85941 2.83339 2.78326 2.73554 3.72325 3.67301 3.57710 3.48685 4.54595 4.46511 4.31213 4.16986 5.32948 5.21236 4.99271 4.79079 6.07569 5.91732 5.62288 5.35526 6.78637 6.58238 6.20637 5.86842 7.46321 7.20979 6.74664 6.33493 8.10782 7.80169 7.24689 6.75902 12% 1.00000 1.89286 2.69005 3.40183 4.03735 4.60478 5.11141 5.56376 5.96764 6.32825 From the lessor's viewpoint, what type of lease is involved? Operating lease Sale-leaseback Sales-type lease Direct-financing lease Click if you would like to Show Work for this question: Open Show Work