Your firm is considering leasing a $49,000 copier. The copier has an estimated economic life of eight years. Suppose the appropriate discount rate is 9.4% 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 $1140 per month

b. A six-year fair market value lease with payments of $790 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 $1010 per month and an option to cancel after three years with a $8700 cancellation penalty