QUESTION 1 On January 1, 2021, Foster Corporation signed a ten-year non-cancelable lease for certain machinery. The terms of the lease called for Foster to make annual payments of $200,000 at the end of each year for ten years with title to pass to Foster at the end of this period. The machinery has an estimated useful life of 15 years and no salvage value. Foster uses the straight-line method of depreciation for all of its fixed assets. Foster accordingly accounted for this lease transaction as a financing lease. The lease payments were determined to have a present value of $1,342,016. If the interest expense charged for the year ended 2021 is $40,260, then Question: What is the effective rate of interest? NOTE: If you think the answer is 2% write 2