Problem 21-9 Sheridan Inc. was incorporated in 2016 to operate as a computer software service firm with an accounting fiscal year ending August 31. Sheridan's primary product is a sophisticated online inventory- control system ts customers pay a fixed fee plus a usage charge for using the system Sheridan has leased a large, Alpha-3 computer system from the manufacturer. The lease calls for a monthly rental of $34,000 for the 144 months (12 years) of the lease term. The estimated useful life of the computer is 15 years. Each scheduled monthly rental payment includes $2,500 for full-service maintenance on the computer to be performed by the manufacturer. All rentals are payable on the first day of the month beginning with August 1, 2017, the date the computer was installed and the lease agreement was signed. The lease is noncancelable for its 12-year term, and it is secured only by the manufacturer's chattel en on the Alpha-3 system. This lease is to be accounted for as a capital lease by Sheridan, and it will be depreciated by the straight-line method with no expected salvage value. Borrowed funds for this type of transaction would cost Sheridan 12% per year (1% per month). Following is a schedule of the present value of $1 for selected periods discounted at 1% per period when payments are made at the beginning of each period. Present Value of $1 per Period Periods Discounted at 1% per (months) Period 1.000 1.990 2.970 143 76.658 144 76.899