Refer to the following lease amortization schedule. The 10 payments are made annually starting with the beginning of the lease. Title does not transfer to the lessee and there is no purchase option or guaranteed residual value. The asset has an expected economic life of 12 years. The lease is noncancelable. Cash Payment Effective Interest Decrease in balance Payment 1 2 3 4 5 6 12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000 0 6,911 6,402 5,842 5, 226 4,549 3,804 2,984 ? 12,000 5,089 5,598 6,158 6,774 7,451 8,196 9,016 ? ? Outstanding Balance 81, 108 69,108 64,019 58,421 52, 263 45,489 38,038 29,842 20, 826 ? ? 7 8 9 10 ? What is the effective annual interest rate? (Round final answer to the nearest whole percentage.) Multiple Choice 7%. O O 8%. O 10%. O O 12%