Refer to the Following Lease Amortization Schedule

question 7

Multiple Choice

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.

-What is the total interest paid over the term of the lease?

• A) $42,000.
• B) $8,200.
• C) $7,400.
• D) $3,460.