On January 1, 2021, 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 $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)

Jan. 1 Payments Effective Interest Decrease in Balance Outstanding Balance

2021 188,000

2021 16,000 16,000 172,000

2022 16,000 12,040 3,960 168,040

2023 16,000 11,763 4,237 163,803

2024 16,000 11,466 4,534 159,269

2025 16,000 11,149 4,851 154,418

2026 16,000 10,809 5,191 149,227

2038 16,000 4,309 11,691 49,872

2039 16,000 3,491 12,509 37,363

2040 16,000 2,615 13,385 23,978

2041 25,656 1,678 23,978 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.)