Refer to the following lease amortization schedule. The 10 payments are made ann

Question

Refer to the following lease amortization schedule. The 10 payments are made annually starting with the inception of the lease. Title does not transfer to the lessee and there is no bargain purchase option or guaranteed residual value. The asset has an expected economic life of 12 years. The lease is noncancelable.

7%.

Refer to the following lease amortization schedule. The 10 payments are made annually starting with the inception of the lease. Title does not transfer to the lessee and there is no bargain purchase option or guaranteed residual value. The asset has an expected economic life of 12 years. The lease is noncancelable.

Explanation / Answer

What is the effective annual interest rate? (Round final answer to the nearest whole percentage.)

effective annual interest rate = 2962/32907 = 9%

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