On January 1, 2021, 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
							234,123
2021	25,000				25,000		209,123
2022	25,000		20,912		4,088		205,035
2023	25,000		20,504		4,496		200,539
2024	25,000		20,054		4,946		195,593
2025	25,000		19,559		5,441		190,152
2026	25,000		15,212		9,788		180,364
2027	25,000		14,233		10,767		169,597
2038	25,000		6,217		18,783		43,388
2039	25,000		4,339		20,661		22,727
2040	25,000		2,273		22,727		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