On January 1, 2015, DirectJet leased a DASH-8 from a leasing company. The lease agreement specifies four annual payments of $1,000,000 beginning January 1, 2015, the inception of the lease, and on each January 1 through 2019. The useful life of the aircraft is estimated to be seven years. Before deciding to lease, DirectJet considered purchasing the aircraft for its cash price of $4,700,000. If funds were borrowed to buy the aircraft, the interest rate would have been 10%.

aHow should this lease be classified?

bCalculate the lease amortization schedule