Exercise 21-03 (Part Level Submission) Kingbird Company leases an automobile with a fair value of $20,275 from John Simon Motors, Inc., on the following terms: 1. Non-cancelable term of 50 months. 2. Rental of $430 per month (at the beginning of each month). 3. Kingbird guarantees a residual value of $1,030. Delaney expects the probable residual value to be $1,030 at the end of the lease term. 4. Estimated economic life of the automobile is 60 months. 5. Kingbirds incremental borrowing rate is 6% a year (0.5% a month). Simons implicit rate is unknown. Click here to view factor tables. (For calculation purposes, use 5 decimal places as displayed in the factor table provided.) Your answer is incorrect. Try again. Suppose that instead of $1,030, Kingbird expects the residual value to be only $500 (the guaranteed amount is still $1,030). 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 $enter the present value of lease payments in dollars rounded to 0 decimal places PVFn,i=1(1+i)n=(1+i)nPVFn,i=1(1+i)n=(1+i)n (n) Periods 2% 2% 3% 4% 5% 6% 1 .98039 .97561 .97087 .96154 .95238 .94340 2 .96117 .95181 .94260 .92456 .90703 .89000 3 .94232 .92860 .91514 .88900 .86384 .83962 4 .92385 .90595 .88849 .85480 .82270 .79209 5 .90573 .88385 .86261 .82193 .78353 .74726 6 .88797 .86230 .83748 .79031 .74622 .70496 7 .87056 .84127 .81309 .75992 .71068 .66506 8 .85349 .82075 .78941 .73069 .67684 .62741 9 .83676 .80073 .76642 .70259 .64461 .59190 10 .82035 .78120 .74409 .67556 .61391 .55839 11 .80426 .76214 .72242 .64958 .58468 .52679 12 .78849 .74356 .70138 .62460 .55684 .49697 13 .77303 .72542 .68095 .60057 .53032 .46884 14 .75788 .70773 .66112 .57748 .50507 .44230 15 .74301 .69047 .64186 .55526 .48102 .41727 16 .72845 .67362 .62317 .53391 .45811 .39365 17 .71416 .65720 .60502 .51337 .43630 .37136 18 .70016 .64117 .58739 .49363 .41552 .35034 19 .68643 .62553 .57029 .47464 .39573 .33051 20 .67297 .61027 .55368 .45639 .37689 .31180 21 .65978 .59539 .53755 .43883 .35894 .29416 22 .64684 .58086 .52189 .42196 .34185 .27751 23 .63416 .56670 .50669 .40573 .32557 .26180 24 .62172 .55288 .49193 .39012 .31007 .24698 25 .60953 .53939 .47761 .37512 .29530 .23300 26 .59758 .52623 .46369 .36069 .28124 .21981 27 .58586 .51340 .45019 .34682 .26785 .20737 28 .57437 .50088 .43708 .33348 .25509 .19563 29 .56311 .48866 .42435 .32065 .24295 .18456 30 .55207 .47674 .41199 .30832 .23138 .17411 31 .54125 .46511 .39999 .29646 .22036 .16425 32 .53063 .45377 .38834 .28506 .20987 .15496 33 .52023 .44270 .37703 .27409 .19987 .14619 34 .51003 .43191 .36604 .26355 .19035 .13791 35 .50003 .42137 .35538 .25342 .18129 .13011 36 .49022 .41109 .34503 .24367 .17266 .12274 37 .48061 .40107 .33498 .23430 .16444 .11579 38 .47119 .39128 .32523 .22529 .15661 .10924 39 .46195 .38174 .31575 .21662 .14915 .10306 40 .45289 .37243 .30656 .20829 .14205 .09722