Final answer:
The residual value in a lease agreement is included in the present value of minimum periodic payments when it is guaranteed by the lessee.
Step-by-step explanation:
The residual value in a lease agreement refers to the estimated value of an asset at the end of the lease term. It is used to calculate the minimum periodic payments that the lessee must make. The residual value is included in the present value (PV) of the minimum periodic payments when it is considered guaranteed by the lessee. For example, if the lease contract specifies a minimum resale value for the asset at the end of the lease term, that value would be included in the PV calculation. However, if the residual value is not guaranteed and its realization depends on uncertain factors, it would not be included in the PV calculation.