TIME VALUE OF MONEY
Chicago Company has a machine with a cost and fair value of $600,000 on July 1, 2016 which it plans to lease to Cubs Company. The Lease is for 6 years and the machine is estimated to have a salvage value of $60,000 at the end of the 6 year term (i.e., June 30, 2022). If the lessor (Chicago Company) wishes to earn 12% interest on the lease, what is the amount of the equal annual lease payments (assume the payments occur at the beginning of the year with the first payment at July 1, 2016 which is the inception of the lease).