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.

Payment		Cash Payment		Effective Interest		Decrease in balance		Outstanding Balance
								63,282
1		10,000				10,000		53,282
2		10,000		6,394		3,606		49,676
3		10,000		5,961		4,039		45,638
4		10,000		5,477		4,523		41,114
5		10,000		4,934		5,066		36,048
6		10,000		4,326		5,674		30,373
7		10,000		3,645		6,355		24,018
8		10,000		2,882		7,118		16,901
9		10,000		?		?		?
10		10,000		?		?		?

What is the total effective interest paid over the term of the lease?

Multiple Choice

$36,718.

$53,282.

$100,000.

$63,282. incorrect