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       10,000   53,282   2   10,000   6,394   3,606   49,676   3   10,000   5,961   4,039   45,637   4   10,000   5,476   4,524   41,113   5   10,000   4,934   5,066   36,047   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   16,900   9   10,000   ?   ?   ?   10   10,000   ?   ?   ?   What would be the outstanding balance after payment 10? $1,071. $8,929. $10,000. $0.

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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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

 

 

 

 

 

 

 

 

63,282

 

1

 

10,000

 

 

 

10,000

 

53,282

 

2

 

10,000

 

6,394

 

3,606

 

49,676

 

3

 

10,000

 

5,961

 

4,039

 

45,637

 

4

 

10,000

 

5,476

 

4,524

 

41,113

 

5

 

10,000

 

4,934

 

5,066

 

36,047

 

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

 

16,900

 

9

 

10,000

 

?

 

?

 

?

 

10

 

10,000

 

?

 

?

 

?

 

What would be the outstanding balance after payment 10?

  1. $1,071.
  2. $8,929.
  3. $10,000.
  4. $0.

 

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