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On 1 July 2020, Mango Ltd leases an aircraft from Kulula Led for five years. The fair value of theaircraft is $9.5 million. Under the terms of the lease arrangement, Mango Ltd is required to makefive annual payments of $2 million with the first payment due immediately. Each repaymentincludes $120,000 for maintenance arranged by the lessor. The lease has an interest rate of 13%.The residual value of the aircraft is $3 million, of which Mango guarantees 65%. The aircraft has auseful life of six years.Required (round all answers to the nearest dollar)iCalculate the present value of Mango’s minimum lease payments.2 marksiiPrepare journal entries in Mango’s books on 1 July 20233 marksTreat the following scenarios as independent e.g. your answer to (iii) does not affect your answerto (iv) and (v).iiiBefore the lease agreement was finalized, Kulula Ltd offered Mango Ltd the4 marksopportunity to purchase the aircraft for $1.5 million at the end of the lease.Outline the benefits and risks to Mango Ltd if it accepts the proposal,providing supporting calculations.ivKulula Ltd is an aircraft manufacturer.3 marksPrepare Kulula’s journal entries at inception of the lease, assuming it makes a

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