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Classify each lease as a capital lease or operating lease

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Question - Your firm is considering leasing a $50,000 copier. The copier has an estimated economic life of eight years. Suppose the appropriate discount rate is 8.8% APR with monthly compounding.

Classify each lease below as a capital lease or operating lease, and explain why:

a. A four-year fair market value lease with payments of $1,160 per month.

b. A six-year fair market value lease with payments of $800 per month.

c. A five-year fair market value lease with payments of $915 per month.

d. A five-year fair market value lease with payments of $995 per month and an option to cancel after three years with a $9,100 cancellation penalty.

Reference no: EM132963868

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