Sage Hill Company leases an automobile with a fair value of $17,274 from John Simon Motors, Inc., on the following terms: Non-cancelable term of 50 months. 1. 2. Rental of $360 per month (at the beginning of each month). (The present value at 0.5% per month is $15,971.) 3. Sage Hill guarantees a residual value of $1,240 (the present value at 0.5% per month is $966). Sage Hill expects the probable residual value to be $1,240 at the end of the lease term. 4. Estimated economic life of the automobile is 60 months. 5. Sage Hill's incremental borrowing rate is 6% a year (0.5% a month). Simon's implicit rate is unknown. Click here to view factor tables. (For calculation purposes, use 5 decimal places as displayed in the factor table provided.) (a) Your answer is correct. What is the nature of this lease to Sage Hill? The nature of this lease is a/an finance lease.