Question 23 (23 points) On January 1, 2021, ACME Incorporated, a publicly traded company, signed a 5-year, non-cancellable lease agreement to lease equipment from Lessor Ltd. The details of the agreement are as follows: 1. Yearly rental payments due January 01 each year of $115,000. 2. Initial lease term: 5 years. 3. Estimated economic life of leased equipment: 10 years. 4. Equipment fair value at January 01, 2021: $542,000. 5. The lease in renewable for an additional 4 years at $30,000 per year. 6. ACME guarantees the residual value of $5,000 at the end of the lease. 7. The rental payments include $2,500 for insurance on the equipment. 8. At the end of the lease the equipment will be returned to the lessor. Additional information: . ACME's incremental borrowing rate is 8%. The interest rate implicit in the lease is not known to ACME. ACME will still have need of the equipment at the end of the initial lease term.