I am given several hypothetical amounts and interest rates and need to find the amount of the rental payments.

(Lessee-Lessor Entries; Sales-Type Lease)

On January 1, 2011, Palmer Company leased equipment to Woods Corporation. The following information pertains to this lease.

The term of the noncancelable lease is 6 years, with no renewal option. The equipment reverts to the lessor at the termination of the lease.
Equal rental payments are due on January 1 of each year, beginning in 2011.
The fair value of the equipment on January 1, 2011, is $200,000, and its cost is $150,000.
The equipment has an economic life of 8 years, with an unguaranteed residual value of $10,000. Woods depreciates all of its equipment on a straight-line basis.
Palmer set the annual rental to ensure an 11% rate of return. Woods's incremental borrowing rate is 12%, and the implicit rate of the lessor is unknown.
Collectibility of lease payments is reasonably predictable, and no important uncertainties surround the amount of costs yet to be incurred by the lessor.

This is the hypothetical that was given and I am hoping there is some help out there. Thanks in advance

To find the amount of rental payments, you need to calculate the present value of the lease payments using the interest rate provided.

Here are the steps you can follow:

1. Determine the annual rental payment amount:
Since the lease payments are equal, you need to find the amount of each payment. Divide the cost, $150,000, by the present value of an ordinary annuity factor for 6 years at an 11% rate of return. You can find this factor in tables or use financial calculator functions.

2. Calculate the present value of the residual value:
The residual value of $10,000 is due at the end of the lease. Calculate the present value of this amount using the present value of $1 factor for 6 years at an 11% rate of return. You can find this factor in tables or use financial calculator functions.

3. Add the present value of the rental payments and the present value of the residual value to get the total present value of the lease payments.

Once you have the present value of the lease payments, you can use that value to determine the equal rental payments due on January 1 of each year, beginning in 2011.