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 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 | |||||
| 101,385 | |||||||||
| 1 | 15,000 | 15,000 | 86,385 | ||||||
| 2 | 15,000 | 8,639 | 6,361 | 80,024 | |||||
| 3 | 15,000 | 8,002 | 6,998 | 73,026 | |||||
| 4 | 15,000 | 7,303 | 7,697 | 65,329 | |||||
| 5 | 15,000 | 6,533 | 8,467 | 56,862 | |||||
| 6 | 15,000 | 5,686 | 9,314 | 47,548 | |||||
| 7 | 15,000 | 4,755 | 10,245 | 37,303 | |||||
| 8 | 15,000 | 3,730 | 11,270 | 26,033 | |||||
| 9 | 15,000 | ? | ? | ? | |||||
| 10 | 15,000 | ? | ? | ? | |||||
What would be the outstanding balance after payment 10?
Multiple Choice
$15,000.
$0.
$13,636.
$1,364.
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