Answer and Explanation:
Lease Cash Effective Decrease in Outstanding
Payment Payment Interest Balance Balance
$ 34,600
1 $ 8,000 $ 3,460* $ 4,540** $ 26,600
2 $ 8,000 $ 2,660 $ 5,340 $ 21,260
3 $ 8,000 $ 2,126 $ 5,874 $ 15,386
4 $ 8,000 $ 1,539 $ 6,461 $ 8,925
5 $ 8,000 $ 893 $ 7,108 $ 1,818***
6 $ 2,000 $ 182 $ 1,818 $ -
*34600 x 10%
**8000-4540
***8000-7108
Interest rate = interest on second lease payment/outstanding balance after 1st payment x 100
Interest rate = 2660/26600 x 100
Interest rate = 10%
