M & O Company is preparing an Excel spreadsheet for a 5-year finance lease. The implicit interest rate in the lease is 6%. The beginning of the lease is January 1. Lease payments are made each December 31. A portion of the spreadsheet appears as follows:
- What formula should M & O use in cell C8?
A) =B8+D7
B) =B8+D8
C) =E7*C1
D) =E8*C1

Question

M & O Company is preparing an Excel spreadsheet for a 5-year finance lease. The implicit interest rate in the lease is 6%. The beginning of the lease is January 1. Lease payments are made each December 31. A portion of the spreadsheet appears as follows: 
- What formula should M & O use in cell C8?
A) =B8+D7 
B) =B8+D8 
C) =E7*C1 
D) =E8*C1

Quizplus · Accepted Answer

Interest expense is the effective rate (C1) times the outstanding balance during the second year (E7).

M & O Company Is Preparing an Excel Spreadsheet for a 5-Year