Wenville Savings and Loan Company acquires a piece of specialized manufacturing equipment for $2,000,000 that it leases on January 1, 2011, to a local factory for $466,646 per year, payable in advance. Because of rapid technological developments, the equipment is expected to be replaced after four years. It is expected that the machine will have a residual value of $450,000 to Wenville Savings at the end of the lease term. The implicit rate of interest in the lease is 8%.

1. Prepare a 4-year table for Wenville Savings and Loan similar to Exhibit 15-8.

2. How would the table differ if the local factory guaranteed the residual value to Wenville?