RST entered into a direct financing lease agreement,which required rentals of $9,600,each year-end.The lease term was for ten years and a 14 percent rate of return is expected by RST.The cost of the machine for RST was (rounded to the nearest dollar):

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The present value of the lease payments is $50,075. This is calculated as follows:PV = $9,600 x (1 - (1 + 0.14)^-10) / 0.14= $9,600 x (1 - 0.3220) / 0.14= $9,600 x 0.6780 / 0.14= $50,075

RST Entered into a Direct Financing Lease Agreement,which Required Rentals