1 n 1- 1 111 : uum n a an us 11111 1 11 1 -1 1 17 annually. Title does not transfer to the lessee and there is no purchase option or guarantee of a residual value by Majestic. Portions of the Equipment Leasing's lease amortization schedule appear below: Payments points Jan. 1 2018 2018 2019 2020 2021 2022 2023 2024 27,500 27,500 27,500 27,500 27,500 27,500 27,500 Effective Decrease in Outstanding Interest Balance Balance 257,535 27,500 230,035 23,004 4,497 225,538 4,946 220,592 5,441 215,152 5,985 209,167 20,917 6,583 202,583 7,242 195,342 . eBook 20, 250 1011 Print 6,839 2035 2036 2037 27,500 27,500 27,500 20,661 22,727 24,998 47,726 24,998 4,773 2,500 References Required: 1. What is Majestic's lease liability at the beginning of the lease (after the first payment)? 2. What amount would Majestic record as a right-of-use asset? 3. What is the lease term in years? 4. What is the effective annual interest rate? (Round your percentage answers to 1 decimal place.) 5. What is the total amount of lease payments? 6. What is the total effective interest expense recorded over the term of the lease? years Lease liability Right-of-use asset Lease term Effective annual interest rate Total of lease payments Total effective interest expense 5. 6. Chapter 15 1 Saved Help Save & Che 17 On January 1, 2018, Majestic Mantles leased a lathe from Equipment Leasing under a finance lease. Lease payments are made annually. Title does not transfer to the lessee and there is no purchase option or guarantee of a residual value by Majestic. Portions of the Equipment Leasing's lease amortization schedule appear below: points Payments Jan. 1 2018 2018 2019 2020 2021 2022 2023 2024 Effective Decrease in Outstanding Interest Balance Balance 257, 535 27,500 230,035 23,004 4, 497 225,538 22,554 4,946 220,592 22,059 5, 441 215,152 21,515 5,985 209,167 20,917 6,583 202,583 20,258 7,242 195,342 27,500 27,500 27,500 27,500 27,500 27,500 27,500 eBook Print References 2035 2036 2037 27,500 27,500 27,500 6,839 4,773 2,500 20,661 22,727 24,998 47,726 24,998 Required: 1. What is Majestic's lease liability at the beginning of the lease (after the first payment)? 2. What amount would Majestic record as a right-of-use asset? 3. What is the lease term in years? 4. What is the effective annual interest rate? (Round your percentage answers to 1 decimal place.) 5. What is the total amount of lease payments? 6. What is the total effective interest expense recorded over the term of the lease? 1. 2. 3 Ilease Lease liability Right-of-use asset Lease term Effective annual interest rate Total of lease payments 5