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. Payments Effective Interest Jan. 1 2018 2018 2019 2020 2021 2022 2023 2024 29,000 29,000 29,000 29,000 29,000 29,000 29,000 24,258 23,784 23,262 22,689 22,058 21,363 Decrease in Outstanding Balance Balance 271,582 29,000 242,582 4,742 237,840 5,216 232,624 5,738 226,887 6,311 220,575 6,942 213,633 7,637 205,996 2035 2036 2037 29,000 29,000 29,000 7,212 5,033 2.636 21,788 23,967 26,360 50,327 26,360 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 Lease liability Right-of-use asset Lease term Efective annual interest rate 5 Total of lease payments Total effective interest expense 6