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:

Jan. 1 Payments Effective Interest Decrease in Balance Outstanding Balance

233,828

2018 23,500 0 23,500 210,328

2018 23,500 18,930 4,570 205,758

2019 23,500 18,518 4,982 200,776

2020 23,500 18,070 5,430 195,346

2021 23,500 17,581 5,919 189,427

2022 23,500 13,691 9,809 179,618

2023 23,500 12,808 10,692 168,926

------- --------- ------------- ------------ -----------

2035 23,500 5,354 18,146 41,339

2036 23,500 3,721 19,779 21,560

2037 23,500 1,940 21,560 0

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?