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On January 1, 2018, National Insulation Corporation (NIC) leased equipment from United Leasing under a finance lease. Lease payments are made annually. Title does not

On January 1, 2018, 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 Leasings lease amortization schedule appear below: (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1and PVAD of $1) (Use appropriate factor(s) from the tables provided.)

Jan. 1 Payments Effective Interest Decrease in Balance Outstanding Balance
2018 225,001
2018 26,000 26,000 199,001
2019 26,000 23,880 2,120 196,881
2020 26,000 23,626 2,374 194,507
2021 26,000 23,341 2,659 191,848
2022 26,000 23,022 2,978 188,870
2023 26,000 22,664 3,336 185,534
2035 26,000 13,004 12,996 95,374
2036 26,000 11,445 14,555 80,819
2037 26,000 9,698 16,302 64,517
2038 72,259 7,742 64,517 0

Required: 1. What is the lease term in years? 2. What is the assets residual value expected at the end of the lease term? (Round your answers to nearest whole dollar.) 3. What is the effective annual interest rate? (Round your percentage answer to 1 decimal place.) 4. What is the total amount of lease payments for United? (Round your answers to nearest whole dollar.) 5. What is the total amount of lease payments for NIC? (Round your answers to nearest whole dollar.) 6. What is Uniteds net investment at the beginning of the lease (after the first payment)? (Round your answers to nearest whole dollar.) 7. What is Uniteds total effective interest revenue recorded over the term of the lease? (Round your answers to nearest whole dollar.) 8. What amount would NIC record as a right-of-use asset at the beginning of the lease? (Round your answers to nearest whole dollar.)

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