On December 29, Year 1, Action Corp. signed a 7-year lease for an airplane to transport its professional sports team around the country. The airplane's fair value was $841,500. Action made the first annual lease payment of $153,000 on December 31, Year 1. Action's incremental borrowing rate was 12%, and the interest rate implicit in the lease, which was known by Action, was 9%. The following are the rounded present value factors for an annuity due: 9% for 7 years 5.5 12% for 7 years 5.1

What amount should Action report as a lease liability in its December 31, Year 1, balance sheet?
a. $780,300
b. $627,300
c. $688,500
d. $841,500