Problem 15-2 Finance lease [LO15-2] At the beginning of 2018, VHF Industries acquired a machine with a fair value of $6,479,440 by signing a four-year lease. The lease is payable in four annual payments of $2.0 million at the end of each year. (FV of $1. PV of $1. FVA of $1. PVA of $1. FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: 1. What is the effective rate of interest implicit in the agreement? 2-4. Prepare the lessee's journal entries at the beginning of the lease, the first lease payment at December 31, 2018 and the second lease payment at December 31, 2019. 5. Suppose the fair value of the machine and the lessor's implicit rate were unknown at the time of the lease, but that the lessee's incremental borrowing rate of interest for notes of similar risk was 8%. Prepare the lessee's entry at the beginning ofthe lease. Complete this question by entering your answers in the tabs below. Req 1Req 2 and 4 Req 5 What is the effective rate of interest implicit in the agreement? implicit interest rate View transaction list Journal entry worksheet Record lease. Note: Enter debits before credits. Date General Journal Debit Credit January 01, 2018 Record entry Clear entry View general journal KReq 2 and 4 Req 5