Renter Co. acquired the use of a machine by agreeing to pay the manufacturer of the machine $800 per year for 10 years. At the time the lease was signed, the interest rate for a 10-year loan was 12%.Table 6-5.(Use appropriate factor from the tables provided.)

Required:

a.Calculate the amount that Renter Co. could have paid at the beginning of the lease to buy the machine outright.(Round your answer to 2 decimal places.)

b.What causes the difference between the amount you calculated in partaand the total of $8,000 ($800 per year for 10 years) that Renter Co. will pay under the terms of the lease?

• The difference between the total amount paid and the present value of the lease payments is interest.
• The difference between the total amount paid and the present value of the lease payments is depreciation.
• The difference between the total amount paid and the present value of the lease payments is taxes.

c.What is the appropriate amount of cost to be reported in Renter Co.'s balance sheet (at the time the lease was signed) with respect to this asset?(Round your answer to 2 decimal places.)