Refer to the following lease amortization schedule. The five payments are made annually starting with the beginning of the lease. A $2,800 purchase option is reasonably certain to be exercised at the end of the five-year lease. The asset has an expected economic life of eight years.

Lease Payment	Cash Payment	Effective Interest			Decrease in Balance			Outstanding Balance
									43,020
1	9,900		??			??			33,120
2	9,900		3,312			6,588			26,532
3	9,900		2,653			7,247			19,285
4	9,900		1,929			7,971			11,314
5	9,900		??			??			??
6	2,800		255			2,545			0

What is the outstanding balance after payment 5?

Multiple Choice

• $2,545.

• $2,800.

• $3,055.

• $5,345.