Problem 21A-1 a-c

The following facts pertain to a non-cancelable lease agreement between Faldo Leasing Company and Ivanhoe Company, a lessee.

Commencement date		January 1, 2017
Annual lease payment due at the beginning of each year, beginning with January 1, 2017		$96,097
Residual value of equipment at end of lease term, guaranteed by the lessee		$52,000
Expected residual value of equipment at end of lease term		$47,000
Lease term		6	years
Economic life of leased equipment		6	years
Fair value of asset at January 1, 2017		$565,000
Lessors implicit rate		4	%
Lessees incremental borrowing rate		4	%

The asset will revert to the lessor at the end of the lease term. The lessee uses the straight-line amortization for all leased equipment.

Find the present value of lease payments.