Problem 14-14 (IAA) Reagan Company used leases as a method of selling products. In 2020, Reagan Company completed construction of a passenger ferry. On January 1, 2020, the ferry was leased to the Super Ferry, Line on a contract specifying that ownership of the ferry will transfer to the lessee at the end of the lease period. Original cost of the ferry Fair value of ferry at lease date 8,000,000 Lease payments in advance 13,000,000 Residual value 1,500,000 Implicit interest rate 2,000,000 Date of first lease payment Lease term January 1, 2020 20 years Present value of an annuity due of 1 at 10% for 20 periods 8.37 Present value of 1 at 12% for 20 periods 0.10 '1. What is the gross investment in the lease? 30,000,000 b. 32,000,000 10,000,000 d. 38,000,000 12% a. c. 2. What is the net investment in the lease? a. 12,555,000 b. 13,000,000 C. 12,755,000 d. 8,000,000 3. What is the gross profit on sale for 2020? a. 6,555,000 b. 4,555,000 c. 5,000,000 d. 7,000,000 4. What is the interest income for 2020? a. 1,506,600 b. 1,560,000 c. 1,326,600 d. 1,380,000 485