Crane Leasing Company agrees to lease equipment to Cheyenne Corporation on January 1, 2025. The following information relates to the lease agreement. The term of the lease is 7 years with no renewal option, and the machinery has an estimated economic life of 9 years. The cost of the machinery is $510,000, and the fair value of the asset on January 1. 2025, is $717,000. At the end of the lease term, the asset reverts to the lessor and has a guaranteed residual value of $60.000. Cheyenne estimates that the expected residual value at the end of the lease term will be $60,000. Cheyenne amortizes all of its leased equipment on a straight-line basis. 4.118 The lease agreement requires equal annual rental payments, beginning on January 1. 2025. The collectibility of the lease payments is probable. Crane desires a 11% rate of return on its investments. Cheyenne's incremental borrowing rate is 12%, and the Jessor's implicit rate is unknown. (Assume the accounting period ends on December 31.)