On January $1,2023,$ Cullumber Leasing Inc., a lessor that uses IFRS, signed an agreement with Rock River Inc., a lessee, for the use of a

compression system. The system cost $$418,000$ and Cullumber purchased it from Manufacturing Solutions Ltd$.$ specifically for Rock

River. Annual payments are made each January $1$ by Rock River. In addition to making the lease payment, Rock River also reimburses

Cullumber $$5,100$ each January $1$ for a portion of the repairs and maintenance expenditures, which cost Cullumber a total of $$6,300$

per year. At the end of the five$-$year agreement, the compression equipment will revert to Cullumber and is expected to have a residual

value of $$27,400,$ which is not guaranteed. Collectibility of the rentals is reasonably predictable, and there are no important

uncertainties surrounding the costs that have not yet been incurred by Cullumber.

Click here to view the factor table PRESENT VALUE OF $1.$

Click here to view the factor table PRESENT VALUE OF AN ANNUITY DUE.

$($a$)$

Assume that Cullumber has a required rate of return of $11\%.$ Calculate the amount of the lease payments that would be need to

generate this return on the agreement if payments were made each: $($Round factor values to $5$ decimal places, e$.$g$.1\mathrm{.}25124$ and final

answers to $2$ decimal places, e$.$g$.5,275.)$

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