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Four independent situations are described below. For each, annual lease payments of $100,000 (not including any executory costs paid by lessor) are payable at the beginning of each year. Each is a capital lease for both the lessor and lessee. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)

	Situation
		1			2			3			4
Lease term (years)		3			4			5			3
Lessors cost	$	388,175		$	478,396		$	450,000		$	380,000
Assets useful life (years)		5			6			6			4
Lessors implicit rate (known by lessee)		8	%		10	%		10	%		8	%
Lessees incremental borrowing rate		7	%		8	%		12	%		10	%
Residual value:
Guaranteed by lessee		0		$	72,000		$	59,000		$	79,000
Guaranteed by third party*		0			0			0		$	69,000
Unguaranteed	$	49,000			0		$	54,000		$	59,000
Executory costs paid annually by lessor	$	2,000		$	10,000		$	10,000		$	29,000

*	Over and above any amount guaranteed by the lessee (after a deductible equal to any amount guaranteed by the lessee).

Determine the following amounts at the inception of the lease.

A The lessor's: 1 2 3 4 minimum lease payments gross investment in the lease net investment in the lease sales revenue Cost of goods sold dealer's profit B The lessee's: minimum lease payments leased asset lease payable

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