Reqmnt 7 and 8

k 5 - Apply: Homework Check my work mode : This shows what is correct or incorrect for the work you ha 2 On January 1, 2021, National Insulation Corporation (NIC) leased equipment from United Leasing under a finance lease. Lease payments are made annually. Title does not transfer to the lessee and there is no purchase option or guarantee of a residual value by NIC. Portions of the United Leasing's lease amortization schedule appear below: (FV of $1, PV of $1, EVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Effective Decrease in Outstanding joints Jan. 1 Payments Interest Balance Balance 2021 550, 000 2021 50,000 50, 900 500, 090 2022 50,000 40, 000 10, 000 490, 060 2023 50, 000 39, 200 10, 800 479, 200 2024 50, 000 38, 336 11, 664 467, 536 2025 50, 000 37, 403 12, 597 454, 939 2026 50, 000 36, 395 13, 605 441, 334 2038 50, 060 15, 741 34, 259 162, 499 2039 50, 000 13,000 37,090 125, 499 2040 50, 000 10, 040 39, 960 85, 539 2041 92, 382 6, 843 85, 539 Required: 1. What is the lease term in years? 2. What is the asset's residual value expected at the end of the lease term? (Round your answers to nearest whole dollar.) 3. What is the effective annual interest rate? (Round your percentage answer to 1 decimal place.) 4. What is the total amount of lease payments for United? (Round your answers to nearest whole dollar.) 5. What is the total amount of lease payments for NIC? (Round your answers to nearest whole dollar.) 6. What is United's net investment at the beginning of the lease (after the first payment)? (Round your answers to nearest whole dollar.) 7. What is United's total effective interest revenue recorded over the term of the lease? (Round your answers to nearest whole dollar.) 8. What amount would NIC record as a right-of-use asset at the beginning of the lease? (Round your answers to nearest whole dollar.) * Answer is not complete. 1 . Lease term 20 years 2 . Asset's residual value $ 92,382 3 . Effective annual interest rate 8.0 % 4 . Lease payments for United $ 1,092,382 5 . Lease payments for NIC $ 1,000,000 6 . Net investment $ 500,000 Total effective interest revenue Co Right-of-use asset