15-6 (Static) Lease amortization schedule [LO15-2, 15-6] On January 1, 2024, National Insulation Corporation (NIC) leased equipment from United 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 NIC. Portions of the United Leasing's lease amortization schedule appear below: Effective Interest Decrease in Balance Outstanding Balance $ 192,501 January 1 2024 Payments 2024 $ 20,000 $ 20,000 $ 172,501 2025 $ 20,000 $ 17,250 $ 2,750 $ 169,751 2026 $ 20,000 $ 16,975 $ 3,025 $ 166,726 2027 $ 20,000 $ 16,673 $ 3,327 $ 163,399 2028 $ 20,000 $ 16,340 $ 3,660 $ 159,739 2029 $ 20,000 $ 15,974 $ 4,026 $ 155,713 2041 $ 20,000 $ 7,364 $ 12,636 $ 61,006 2042 $ 20,000 $ 6,101 $ 13,899 $ 47,107 2043 $ 20,000 $ 4,711 $ 15,289 $ 31,818 2044 $ 35,000 $ 3,182 $ 31,818 $ 0 Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) Required: 1. What is the lease term in years? 2. What is the asset's residual value expected at the end of the lease term? 3. What is the effective annual interest rate? 4. What is the total amount of lease payments for United? 5. What is the total amount of lease payments for NIC? 6. What is United's net investment at the beginning of the lease (after the first payment)? 7. What is United's total effective interest revenue recorded over the term of the lease? 8. What amount would NIC record as a right-of-use asset at the beginning of the lease? Answer is not complete. 1. Lease term 20 years 2. Asset's residual value $ 35,000 3. Effective annual interest rate 10 % 4. Total lease payments for United $ 435,000 5. Total lease payments for NIC $ 400,000 6. Net investment $ 172,501 7. Total effective interest revenue 8. Right-of-use asset