Schrute Company leases an automobile with a fair value of $15,005 from Rainn, Inc., on the following terms:

1.		Non-cancelable term of 50 months.
2.		Rental of $300 per month (at the beginning of each month).
3.		Shrute guarantees a residual value of $1,800 (the present value at 0.5% per month is $1,403). The expected residual value is estimated to be $1,800 at the end of the lease term.
4.		Estimated economic life of the automobile is 60 months.
5.		Schrutes incremental borrowing rate is 6% a year (0.5% a month). Rainns implicit rate is unknown.

What is the present value of the lease payments to determine the lease liability?

Present Value of an Annuity Due with 0.5% and 60 periods: 51.98419

Present Value of an Ordinary Annuity at 0.5% and 60 periods: 48.17337352

Present Value of an Annuity Due with 0.5% and 50 periods: 44.36350

Present Value of an Ordinary Annuity with 0.5% and 50 Periods:41.56644707

Question 30 options:

a)

$15,595

b)

$13,310

c)

$14,452.

d)

$12,740