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What is the annual rental payment

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An entity acquired an asset costing P3,165,000. The asset is leased to another entity for 5 years. The five annual lease payment are due at the end of each year. The unguaranteed residual value of the asset at the end of the lease term is P500,000. The asset will revert to the lessor at the end of the lease term. The lessor's implicit interest rate is 12%. The PV of 1 at 12% for 5 periods is 57 and the PV of an ordinary annuity of 1 at 12% for 5 periods is 3.60.

Question 1: What is the annual rental payment?

Reference no: EM132518374

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