Patriots Inc. is interested in leasing a new air compressor from Krafts Athletic Shop. The new 2015 model is selling for $99,900. Patriots can lease the machine for 7 years, with annual payments of $15,300. The machine has a useful life of 9 years. If Patriots Inc. borrows money they pay 3.5 percent interest.

Question: Based on the present value of the lease payments criteria, would the lease be classified as an operating lease or capital lease ? (Show all work)