Teal Leasing Company agrees to lease machinery to Flint Corporation on January 1, 2017. The following information relates to the lease agreement. 1. The term of the lease is 7 years with no renewal option, and the machinery has an estimated economic life of 9 years. 2. The cost of the machinery is $489,000, and the fair value of the asset on January 1, 2017, is $699,000. 3. At the end of the lease term, the asset reverts to the lessor and has a guaranteed residual value of $94,000. Flint depreciates all of its equipment on a straight-line basis. 4. The lease agreement requires equal annual rental payments, beginning on January 1, 2017. 5. The collectibility of the lease payments is reasonably predictable, and there are no important uncertainties surrounding the amount of costs yet to be incurred by the lessor. 6. Teal desires a 9% rate of return on its investments. Flints incremental borrowing rate is 10%, and the lessors implicit rate is unknown. Compute the present value of the minimum lease payments.