On January 1, 2021, Majestic Mantles leased a lathe from Equipment Leasing under a finance lease. Lease payments are made annually. Title does not transfer to the lessee and there is no purchase option or guarantee of a residual value by Majestic. Portions of the Equipment Leasing’s lease amortization schedule appear below: Jan. 1 Payments Effective Interest Decrease in Balance Outstanding Balance 187,298 2021 20,000 20,000 167,298 2022 20,000 16,730 3,270 164,028 2023 20,000 16,403 3,597 160,431 2024 20,000 16,043 3,957 156,474 2025 20,000 15,647 4,353 152,121 2026 20,000 15,212 4,788 147,333 2027 20,000 14,733 5,267 142,066 — — — — — — — — — — — — — — — 2038 20,000 4,974 15,026 34,711 2039 20,000 3,471 16,529 18,182 2040 20,000 1,818 18,182 0 Required: 1. What is Majestic’s lease liability after the first lease payment? 2. What amount would Majestic record as a right-of-use asset? 3. What is the lease term in years? 4. What is the effective annual interest rate? 5. What is the total amount of lease payments? 6. What is the total effective interest expense recorded over the term of the lease?