Shamrock AG leases an automobile with a fair value of 9,527 from Simon Motors, on the following terms.

1.		Non-cancelable term of 50 months.
2.		Rental of 200 per month (at the beginning of each month). (The present value at 0.5% per month is 8,873.)
3.		Shamrock guarantees a residual value of 1,100 (the present value at 0.5% per month is 468). Shamrock expects the probable residual value to be 1,100 at the end of the lease term.
4.		Estimated economic life of the automobile is 60 months.
5.		Shamrocks incremental borrowing rate is 6% a year (0.5% a month). Simons implicit rate is unknown.

X Your answer is incorrect. Suppose that instead of 1,100, Shamrock expects the residual value to be only 500 (the guaranteed amount is still 1,100). How does the calculation of the present value of the lease payments change from part (b)? (Round answer to 0 decimal places, e.g. 5,275.) PV of lease payments 9278 eTextbook and Media List of Accounts