On January 1, James Industries leased equipment to a customer for a six-year period, at which time possession of the leased asset will revert back to James. The equipment cost James $760,000 and has an expected useful life of eight years. Its normal sales price is $760,000. The residual value after six years is $100,000. Lease payments are due on December 31 of each year, beginning with the first payment at the end of the first year. The interest rate is 8%.

Calculate the amount of the annual lease payments.

Chart to Use:

\begin{tabular}{|l|l|} \hline Table or calculator function: \\ \hline \\ \hline & Residual Value \\ \hline Amount to be recovered (fair value) & \\ \hline Present value of the residual value & \\ \hline Amount to be recovered through periodic lease payments & \\ \hline Table or calculator function: & \\ \hline & \\ \hline \end{tabular}