A company leases the following asset:

Fair value of $200,000.

Useful life of 5 years with no salvage value.

Lease term is 4 years. It is noncancellable.

Annual lease payment is $30,000 and the lease rate is 11%.

The companys overall borrowing rate is 9.5%.

The firm can purchase the equipment at the end of the lease period for $45,000.

What type of lease is this?

	a.	operating
	b.	capital