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 2018 2018 2019 2020 2021 2022 2023 2024 24,000 24,000 24,000 24,000 24,000 24,000 24,000 Effective Decrease in Outstanding Interest Balance Balance 224,758 24,000 200,758 20,076 3,924 196,834 19,683 4, 317 192,517 19,252 4,748 187,769 18,777 5, 223 182,546 18,255 5,745 176,800 17,680 6,320 170, 480 2035 2036 2037 24,000 24,000 24,000 5,968 4,165 2,182 18,032 19,835 21,818 41,652 21,818 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? 1. 2. 3. Lease liability Right-of-use asset Lease term Effective annual interest rate Total of lease payments Total effective interest expense years % 4. 5. 6