Lakeram Spirits (LS) is considering leasing a factory from Navin Flour Mill (FM) to expand their rum distillery line of business. It has already been determined that the lease does not meet the requirements of a finance lease classification under the transfer of ownership test, bargain purchase option test, or alternative use test. The remaining details of the lease are as follows. The useful life of the factory is 15 years and the foced non-cancelable term of the lease is 10 years. The firm has the option to renew on a year to year basis after the 10th year. The firm is reasonably certain that they will exercise 3 of these yearly options as the rental rate is significant bargain. The fair market value of the factory is $800.000 and the lease contains an unguaranteed residual value. The present value of the fixed lease payments is 5600,000. The present value of the renewal options that are reasonably certain to be exercised is $75.000. The present value of the unguaranteed residual value is 5100,000. How should this lease be classified and what are the results of the Lease Term and Present Value tests? (Choose the letter that is correct for all 3 questions) Finance or Operating Lease Lease Term Test Result Present Value Test Result a Finance Finance Finance b. Operating Not Finance Not Finance c. Finance Finance Not Finance d Operating Not Finance Finance Row a. is correct in above table Row b. is correct in above table Row c. is correct in above table Row d. is correct in above table