Pharoah Leasing Company agrees to lease equipment to Novak Corporation on January 1,2025 . The following information relates to the lease agreement. 1. The term of the lease is 7 years with no renewal option, and the machinery has an estimated economic life of 9 years. 2. The cost of the machinery is $514,000, and the fair value of the asset on January 1,2025 , is $677,000. 3. At the end of the lease term, the asset reverts to the lessor and has a guaranteed residual value of $55,000. Novak estimates that the expected residual value at the end of the lease term will be $55,000. Novak amortizes all of its leased equipment on a straight-line basis. 4. The lease agreement requires equal annual rental payments, beginning on January 1, 2025. 5. The collectibility of the lease payments is probable. 6. Pharoah desires a 10% rate of return on its investments. Novak's incremental borrowing rate is 11%, and the lessor's implicit rate is unknown. (Assume the accounting period ends on December 31.) Calculate the amount of the annual rental payment required. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 58,972.) Annual rental payment $ eTextbook and Media Compute the value of the lease liability to the lessee. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 58,972 .) Present value of minimum lease payments $ eTextbook and Media