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
								86,963
1		12,000				12,000		74,963
2		12,000		5,997		6,003		68,960
3		12,000		5,517		6,483		62,476
4		12,000		4,998		7,002		55,475
5		12,000		4,438		7,562		47,913
6		12,000		3,833		8,167		39,746
7		12,000		3,180		8,820		30,925
8		12,000		2,474		9,526		21,399
9		12,000		?		?		?
10		12,000		?		?		?

What would be the outstanding balance after payment 10?

Multiple Choice

• $11,111.

• $889.

• $0.

• $12,000.