Lessee ABC INC.leased from Lessor QRS a machine that cost $35,000,which was properly classified as a finance lease by both parties.Assume the lessor used a 12 percent implicit interest rate and that the lessee was informed of that rate.The lease did not include a bargain purchase option and the estimated residual value at termination of the lease was zero.Equal semi-annual lease payments are to be made at the start of each such period,including one on the date the lease was signed.The amount of each semi-annual payment,assuming a five-year lease term,would be:

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The semi-annual lease payment can be calculated using the present value of an annuity due formula, considering the cost of the machine, the interest rate, and the lease term. The correct calculation results in a payment of $4,486.