Aquarius Incorporated (AI) uses leases as a method of selling its products. In early 2011, AI completed construction of a passenger ferry for use between Manhattan and Staten Island. On April 1, 2011, the ferry was leased to the Manhattan Ferry Line on a contract specifying that ownership of the ferry will transfer to the lessee at the end of the lease period. Annual lease payments do not include executory costs. Other terms of the agreement are as follows:

• Original Cost of the ferry $1,500,000
• Fair Value of ferry at the lease date $2,107,102
• Lease Payments (paid in advance) $225,000
• Estimated residual value (unguaranteed) $78,000
• Incremental borrowing rate - lessee $10%
• Date of first lease payment April 1, 2011
• Lease period 20 years

Required:

(a) Compute the amount of financial revenue that will be earned over the lease term and the manufacturer's profit that will be earned immediately by Aquarius