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BE21.1 (LO 2) Callaway Golf Co. leases telecommunications equipment from Photon Company. As- sume the following data for equipment leased from Photon Company. The lease term is 5 years and requires equal rental payments of $31.000 at the beginning of each year . The equipment has a fair value at the com mencement of the lease of $150,000, an estimated useful life of 8 years, and a guaranteed residual value at the end of the lease of $15,500. Photon set the annual rental to earn a rate of return of 6%, and this fact is known to Callaway. The lease does not transfer title or contain a bargain purchase option, and is not a specialized asset How should Callaway classify this lease? The lease does not meet the transfer of ownership test, the bargain purchase test, the economic life test [Why???), the specialized asset test. However, it does pass the present value test. o The PV of the lease payments of ???? . (PMT=????, N=??, I=??%, beg mode, PV? = ?????) o Plus the PV of the residual value of 11,582 equals 150,000 . (FV=????, N=??, I=??%, PV? = ?????) o Is greater than 90% of the FV of the asset (90% X $150,000 = $?????). o Therefore, Callaway should classify the lease as a ???? lease