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 Leasings lease amortization schedule appear below:

Jan. 1	Payments		Effective Interest		Decrease in Balance		Outstanding Balance
							246,579
2018	22,500		0		22,500		224,079
2018	22,500		16,806		5,694		218,385
2019	22,500		16,379		6,121		212,264
2020	22,500		15,920		6,580		205,684
2021	22,500		15,426		7,074		198,610
2022	22,500		11,409		11,091		187,519
2023	22,500		10,577		11,923		175,596
2035	22,500		4,388		18,112		40,400
2036	22,500		3,030		19,470		20,930
2037	22,500		1,570		20,930		0

Required:

1. What is Majestics 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.	Lease liability
2.	Right-of-use asset
3.	Lease term		years
4.	Effective annual interest rate		%
5.	Total of lease payments
6.	Total effective interest expense