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An airline has the following data about an airplane: Annual lease cost $ 8,000,000 Lease term: 12 years Useful life of airplane: 15 years Fair

An airline has the following data about an airplane: Annual lease cost $ 8,000,000 Lease term: 12 years Useful life of airplane: 15 years Fair market value of leased asset: $85 million Present value of lease payments: $75 million Bargain purchase option: None Transfer to lessor at end of lease? Yes Is this a capital or operating lease? Why?

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