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Refer to the following lease amortization schedule. The 10 payments are made annually starting with...

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Accounting

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 0 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 outstanding balance after payment 9?

Multiple Choice

  • $5,000.

  • $8,929.

  • $13,463.

  • $5,537.

Answer & Explanation Solved by verified expert
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