Southwest Airlines provides scheduled air transportation services in the United States. Like many airlines, South-west l

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Southwest Airlines provides scheduled air transportationservices in the United States. Like many airlines, South-westleases many of its planes from Boeing Company. In its long-term debt disclosure note includedin the financial statements for the year ended December 31, 2017,the company listed $885 million in lease obligations. The existingleases had an approximate ten-year remaining life and future leasepayments average approximately $100 million per year.
1. Determine (to the nearest one-half percent) theeffective interest rate the company used to determine the leaseliability assuming that lease payments are made at the end of each fiscalyear.
2. Repeat requirement 1 assuming that lease payments aremade at the beginning of each fiscal year.