On January 1, 2021, Babson Company leased two automobiles for executive use. The lease required Babson to make five annual payments of P1,300,000 beginning January 1, 2021. At the end of the lease...

What is the lease liability immediately after the first required payment?

Extracted text: On January 1, 2021, Babson Company leased two automobiles for executive use. The lease required Babson to make five annual payments of P1,300,000 beginning January 1, 2021. At the end of the lease term, December 31, 2025, the entity guaranteed the residual value of the automobiles at P1,000,000. The interest rate implicit in the lease is 9%. Present value factors for the 9% rate implicit in the lease are: For an annuity due with 5 payments (in advance) For an ordinary annuity with 5 payments Present value of 1 for 5 periods 4.240 3.890 0.650