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The following data apply to the next six questions. As a financial analyst for Ottawa Construction, you have been asked to recommend the method of financing the acquisition of new equipment needed by the firm. The installed cost of this equipment would be $350,000 and the equipment will be depreciated on a straight-line basis over a 5-year estimated useful life. At the end of five years, the equipment would have a salvage value of $50,000. purchased the needed capital can be borrowed at a 10 percent pre-tax annual rate. Should the company choose to purchase the equipment rather than lease it, the company would incur additional pre-tax operating costs of $10,000 per year. The company is in the 40% tax bracket and the weighted after-tax rate of capital (WACC) is 12 percent. Pre-tax lease payments are 80,000 per year for the next five years, with the payments being made at the end of each year. (Hint: no tax on salvage value or scrap value). 26 of 40 This lease would be classified as a n): O A. operating lease because the asset will be obsolete. O B. operating lease because there is not amortization OC leveraged lease because it is being financed. OD. financial lease because the lease life is greater than 75% of the economic life. E. sale and leaseback because the company gets full use of the asset. Unsure