Refer to the following lease amortization schedule. The 10 payments are made annually starting with...
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Refer to the following lease amortization schedule. The 10 payments are made annually starting with the inception of the lease. Title does not transfer to the lessee and there is no bargain 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
Balance
90,938
1
13,000
13,000
77,938
2
13,000
7,014
5,986
71,953
3
13,000
6,476
6,524
65,428
4
13,000
5,889
7,111
58,317
5
13,000
5,249
7,751
50,565
6
13,000
4,551
8,449
42,116
7
13,000
3,790
9,210
32,907
8
13,000
2,962
10,038
22,868
9
13,000
?
?
?
10
13,000
?
?
?
What would be the outstanding balance after payment #10?
$0.
$11,927.
$13,000.
$1,073.
Answer & Explanation
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