Your firm is considering leasing a

$51,000

copier. The copier has an estimated economic life of eight years. Suppose the appropriate discount rate is

8.9%

APR with monthly compounding.

Classify each lease below as a capital lease or operating? lease, and explain? why:

a. A? four-year fair market value lease with payments of

$1,140

per month.

b. A? six-year fair market value lease with payments of

$790

per month.

c. A? five-year fair market value lease with payments of

$925

per month.

d. A? five-year fair market value lease with payments of

$995

per month and an option to cancel after three years with a??

$8,500

cancellation penalty.