SP is considering to lease assets from three potential lessors. The assets are to be used in property development in next year. The Operation Manager provides the details as follows:

Potential lessor

Potential lessor Harman Bhd. Armaq Bhd. Mandel Bhd. Type of asset Excavator Dump Truck Concrete Mixer Yearly rental RM15,000 (first RM6,000 (first RM5,500 (first payment on 31 payment on 28 payment on 30 June December 2018) February 2019) 2019) Inception date 1 January 2018 1 March 2018 1 July 2018 Lease term 10 years 7 years 3 years Estimated economic 25 years 15 years 7 years life Purchase option RM75,000 at end of None None 10 years Renewal option None None None Fair value at RM220,000 RM70,000 RM20,000 inception of lease Guaranteed residual -0- RM15,000 RM10,000 value Estimated residual RM90,000 RM11,000 RM10,000 value at end of lease term Implicit rate 5% 40% 40%