Your firm is considering leasing a $50,000 copier. The copier has an estimated economic life of eight
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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 9% APR with monthly compounding.
Classify each lease below as a finance lease or operating lease, and explain why:
a. A four-year fair market value lease with payments of $1150 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 $925 per month
d. A five-year fair market value lease with payments of $1000 per month and an option to cancel after three years with a $9000 cancellation penalty Appendix
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