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Use the information below to answer the following questions. Refer to the following lease amortization...

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Accounting

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Use the information below to answer the following questions. Refer to the following lease amortization schedule. The five payments are made annually starting with the beginning of the lease. A $2,000 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. Cash Payment Effective Interest Lease Payment Decrease in Balance Outstanding Balance 34,600 26,600 21,260 15,386 8,925 8,000 8,000 8,000 8,000 8,000 2,000 5,340 5,874 6,461 2 2,660 2,126 1,539 4 182 1,818 What is the effective annual interest rate? 9% 10% 11% 20%

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