Sunland Corporation manufactures specialty equipment with an estimated economic life of 12 years and leases it to ProvincialAirlines Corp. for a period of 10 years. Both Sunland and Provincial Airlines follow ASPE. The equipment's normal selling price is$210,482 and its unguaranteed residual value at the end of the lease term is estimated to be $ 12,000 . Provincial Airlines willmake annual payments of $ 27,300 at the beginning of each year and pay for all maintenance and insurance. Sunland incurredcosts of $105,000 in manufacturing the equipment and $7,000 in negotiating and closing the lease. Sunland has determined thatthe collectibility of the lease payments is reasonably predictable, that no additional costs will be incurred, and that the implicitinterest rate is 10 %. Provincial Airlines Corp. has an incremental borrowing rate of 10 %. Click here to view the factor table PRESENT VALUE OF 1. Click here to view the factor table PRESENT VALUE OF AN ANNUITY DUE