Hi, please help with the red circle part!

Exercise 21A-10 a-d (Part Level Submission) The following facts pertain to a non-cancelable lease agreement between Oriole Leasing Company and Sage Hill Company, a lessee Commencement date Annual lease payment due at the beginning of May 1, 2017 each year, beginning with May 1, 2017 Bargain purchase option price at end of lease term Lease term Ec $17,225.30 $4,000 5 years 10 years onomic life of leased equipment Lessor's cost Fair value of asset at May 1, 2017 Lessor's implicit rate Lessee's incremental borrowing rate $55,000 $77,000 8% 8% The collectibility of the lease payments by Oriole is probable