wment Cash Payment Interest 1 2 3 4 5 6 7 8 9 10 $ 12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000 $ 12,000 O Multiple Choice se 6,475 5,978 5,436 4,845 4,201 6% 3,499 $ 2,734 ? ? balance $ 12,000 5,525 6,022 6,564 is the effective annual interest rate? Round final answer to the nearest whole percentage. 7,155 7,799 8,501 $ 9,266 Balance $ 83,943 71,943 66,418 60,396 53,832 46,677 38,878 30,377 $ 21,111

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
Problem 1PS
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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.
Effective Decrease in Outstanding
Balance
$ 83,943
balance
Payment Cash Payment Interest
1
2
3
4
5
6
7
8
9
10
O
Multiple Choice
O
$ 12,000
12,000
12,000
12,000
12,000
12,000
O
12,000
12,000
12,000
$ 12,000
O
9%
What is the effective annual Interest rate?
Note: Round final answer to the nearest whole percentage.
6%
11%
6,475
5,978
5,436
4,845
4, 201
7%
3,499
$ 2,734
?
2
$ 12,000
5,525
6,022
6,564
7,155
7,799
8,501
$ 9,266
?
?
71,943
66,418
60,396
53,832
46,677
38,878
30,377
$ 21,111
?
?
Transcribed Image Text: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. Effective Decrease in Outstanding Balance $ 83,943 balance Payment Cash Payment Interest 1 2 3 4 5 6 7 8 9 10 O Multiple Choice O $ 12,000 12,000 12,000 12,000 12,000 12,000 O 12,000 12,000 12,000 $ 12,000 O 9% What is the effective annual Interest rate? Note: Round final answer to the nearest whole percentage. 6% 11% 6,475 5,978 5,436 4,845 4, 201 7% 3,499 $ 2,734 ? 2 $ 12,000 5,525 6,022 6,564 7,155 7,799 8,501 $ 9,266 ? ? 71,943 66,418 60,396 53,832 46,677 38,878 30,377 $ 21,111 ? ?
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