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Operating lease or capital lease

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Reference no: EM132544534

 A company leases a machine with a six-year life and a cost of $10,000 for 4 years with annual payments of $2,500 due at the end of each year. The lessee can borrow at 4% per annum.

a) Calculate if the lease should be treated as an operating lease or capital lease. What benefits will capital lease yield over operating lease.

Reference no: EM132544534

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