Hi there

Please answer the question on pririty in 1 hour. Thanks in advance.

On January 1, 2005, Golf Tee Inc. will acquire a vehicle from a car dealership for $50,000.

The dealership offers to lease the vehicle to Golf Tee Inc. for five years with payments of

$12,462 due on December 31 of each year. The expected resale value of the car after five

years is $0, and the borrowing rate for Golf Tee Inc. is 12%.

By simply examining the terms, do you believe this lease qualifies as a capital lease

or an operating lease? Explain.