Neal Corp. entered into a nine-year capital lease on a warehouse
on December 31, year 1. Lease payments of $52,000,
which includes real estate taxes of $2,000, are due annually, beginning
on December 31, year 2, and every December 31 thereafter.
Neal does not know the interest rate implicit in the lease;
Neal’s incremental borrowing rate is 9%. The rounded present
value of an ordinary annuity for nine years at 9% is 5.6. What
amount should Neal report as capitalized lease liability at December
31, year 1?