Problem 15-7 (Algo) Lease amortization schedule [LO15-2, 15-6]

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							175,000
2021	12,000				12,000		163,000
2022	12,000		7,335		4,665		158,335
2023	12,000		7,125		4,875		153,460
2024	12,000		6,906		5,094		148,366
2025	12,000		6,676		5,324		143,042
2026	12,000		6,437		5,563		137,479
2038	12,000		2,566		9,434		47,581
2039	12,000		2,141		9,859		37,722
2040	12,000		1,697		10,303		27,419
2041	28,653		1,234		27,419		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.)