Refer to the following lease amortization schedule. The 10
payments are made annually starting with the beginning of the
lease. Title does not transfer to the lessee and there is no
purchase option or guaranteed residual value. The asset has an
expected economic life of 12 years. The lease is
noncancelable.
Payment | Cash Payment |
Effective Interest |
Decrease in balance |
Outstanding Balance | |||||
108,703 | |||||||||
1 | 15,000 | 0 | 15,000 | 93,703 | |||||
2 | 15,000 | 7,496 | 7,504 | 86,200 | |||||
3 | 15,000 | 6,896 | 8,104 | 78,096 | |||||
4 | 15,000 | 6,248 | 8,752 | 69,343 | |||||
5 | 15,000 | 5,547 | 9,453 | 59,891 | |||||
6 | 15,000 | 4,791 | 10,209 | 49,682 | |||||
7 | 15,000 | 3,975 | 11,025 | 38,656 | |||||
8 | 15,000 | 3,093 | 11,907 | 26,749 | |||||
9 | 15,000 | ? | ? | ? | |||||
10 | 15,000 | ? | ? | ? | |||||
What is the effective annual interest rate? (Round final
answer to the nearest whole percentage.)
Answer: 8%
Effective interest Rate =Effective Interest / Carrying Value = $7496/ $93,703 = 8%
= $6896/ $ 86,200 = 8%
Refer to the following lease amortization schedule. The 10 payments are made annually starting with the...
Refer to the following lease amortization schedule. The 10 payments are made annually starting with the beginning of the lease. Title does not transfer to the lessee and there is no purchase option or guaranteed residual value. The asset has an expected economic life of 12 years. The lease is noncancelable Cash Payment Effective Interest Decrease in balance Payment DOWN 11,000 11,000 11,000 11,000 11,000 11,000 11,000 11,000 11,000 11,000 7,033 6,557 6,024 5,427 4,758 4,209 3,170 11,000 3,967 4,443...
Refer to the following lease amortization schedule. The 10 payments are made annually starting with the beginning of the lease. Title does not transfer to the lessee and there is no purchase option or guaranteed residual value. The asset has an expected economic life of 12 years. The lease is noncancelable. Payment Cash Payment Effective Interest Decrease in balance Outstanding Balance 88,595 1 14,000 0 14,000 74,595 2 14,000 8,951 5,049 69,546 3 14,000 8,346 5,654 63,892 4 14,000 7,667...
Refer to the following lease amortization schedule. The 10 payments are made annually starting with the beginning of the lease. Title does not transfer to the lessee and there is no purchase option or guaranteed residual value. The asset has an expected economic life of 12 years. The lease is noncancelable. Payment Cash Payment Effective Interest Decrease in balance Outstanding Balance 63,282 1 10,000 0 10,000 53,282 2 10,000 6,394 3,606 49,676 3 10,000 5,961 4,039 45,638 4 10,000 5,477...
Refer to the following lease amortization schedule. The 10 payments are made annually starting with the beginning of the lease. Title does not transfer to the lessee and there is no purchase option or guaranteed residual value. The asset has an expected economic life of 12 years. The lease is noncancelable. Payment Cash Payment Effective Interest Decrease in balance con AWN 6,996 6,436 5,831 5,178 14,000 14,000 14,000 14,000 14,000 14,000 14,000 14,000 14,000 14,000 14,000 7,004 7,564 8, 169...
Refer to the following lease amortization schedule. The 10 payments are made annually starting with the beginning of the lease. Title does not transfer to the lessee and there is no purchase option or guaranteed residual value. The asset has an expected economic life of 12 years. The lease is noncancelable. Payment Cash Payment Effective Interest Decrease in balance Outstanding Balance 87,867 1 13,000 0 13,000 74,867 2 13,000 7,487 5,513 69,354 3 13,000 6,935 6,065 63,289 4 13,000 6,329...
Refer to the following lease amortization schedule. The five payments are made annually starting with the beginning of the lease. A $2,600 purchase option is reasonably certain to be exercised at the end of the five-year lease. The asset has an expected economic life of eight years. Lease Payment Cash Payment Effective Interest Decrease in Balance Outstanding Balance 41,236 1 8,800 ?? ?? 32,436 2 8,800 1,946 6,854 25,582 3 8,800 1,535 7,265 18,317 4 8,800 1,099 7,701 10,616 5...
Refer to the following lease amortization schedule. The five payments are made annually starting with the beginning of the lease. A $2,500 purchase option is reasonably certain to be exercised at the end of the five-year lease. The asset has an expected economic life of eight years. Lease Cash Payment Payment ?? HNM 9,600 9,600 9,600 9,600 9,600 2,500 Effective Decrease in Outstanding Interest Balance Balance 43,900 ?? 34,300 2,401 7,199 27, 101 1,897 7,703 19, 398 1,358 8, 242...
Refer to the following lease amortization schedule. The five payments are made annually starting with the beginning of the lease. A $1,600 purchase option is reasonably certain to be exercised at the end of the five-year lease. The asset has an expected economic life of eight years. Lease Cash Payment Payment Effective Interest Decrease in Balance ?? 7,980 7,900 7.900 7,900 7,900 1,600 ?? 1,714 1,343 950 Outstanding Balance 36, 470 28,570 22,384 15,827 8,877 6,186 6,557 6,950 ?? ??...
Refer to the following lease amortization schedule. The five payments are made annually starting with the beginning of the lease. A $2,600 purchase option is reasonably certain to be exercised at the end of the five-year lease. The asset has an expected economic life of eight years. payment cash payment Effective Interest Decrease in Balance Outstanding Balance 39,560 1 9,100 30,460 2 9,100 3,046 6,054 24,406 3 9,100 2,441 6,656 17,747 4 9,100 1,775 7,325 10,422 5 9,100 6...
Refer to the following lease amortization schedule. The five payments are made annually starting with the beginning of the lease. A $2,500 purchase option is reasonably certain to be exercised at the end of the five-year lease. The asset has an expected economic life of eight years. Lease Payment Cash Payment Effective Interest Decrease in Balance ?? Outstanding Balance 43,900 34,380 27,101 19,398 11, 156 ?? 9,600 9,600 9,600 9,600 9,600 2,500 N 2,401 1,897 1,358 7,199 7,703 8, 242...