MAP Ltd acquired an item of equipment and entered into a non-cancellable lease agreement with ELM Equipment Ltd on 1 January 2019. The lease consists of the following: Date of inception: 1/1/19...

MAP Ltd acquired an item of equipment and entered into a non-cancellable lease agreement with ELM Equipment Ltd on 1 January 2019. The lease consists of the following:

• Date of inception:                                        1/1/19


• Duration of lease:                                        5 years


• Life of leased asset:                                     6 years


• Lease payments (annual):           $250,000 (annual) which includes $30,000 for                                                                                              Maintenance and insurance costs per annum.


• Guaranteed residual value

(Added to final payment): $70,000

• Interest rate:  6%

Required:

(a) Determine the present value of minimum lease rental payment