On January $3,2014,$ the Walters Corporation signed a $10-$year non$-$cancelable lease for manufacturing equipment. The fair value of the equipment at that time was $$550,000.$ At the end of the lease period, the equipment, which has an estimated life of $15$ years will be returned to the lessor. Additional information is below:

Lease payments $($year$-$end$)$$$80,000$Walters Corporation's incremental borrowing rate$12\%$Lessor's implicit interest rate $($known to Walters$)10\%$