I thought all effective interest methods had the first payment interest free.  So my schedule would look like this:

payments    10%       prin       balance

                                             864,000

150,000      no interest        (150,000)

                                             714,000

150,000    71,400   78,600       (78,600)

                                              635,400

But I am doing a problem where the interest is applied to the first payment.  Is this because the payment is made 1 year later after lease signing?

Thanks for any help.

Yeah, if it is set up to where the first payment is made on the signing of the lease then you will reduce the obligation by all principal.  However, if the first payment isn't at the time of the signing of the lease, then when the first payment is made it will consist of both interest and principal since time will have expired.

Thanks guys.  This could account for why I keep scoring in the 60s on Becker tests on this. I've had a few light bulb moments this week.

Going through the Becker Final Review program now.  I really like this thing.  I like that its new (reviewing old material over and over makes me have an out of body experience).  It's highlighting (for me) what my errors are.  The mcqs and sims are killer with detailed explenations on how the right answer is acheived.  I just need to get my scores up 5 points before I hit the test (10 points would be a nice cushion).

I'm also going through the Becker Final Review this week, and it is really helping me.  It's a nice review, instead of me flipping through the 70 page chapters to try to get a general hold on the material again.  I didn't think the Final Review though was as good for Reg. GOOD LUCK!!