White River Manufacturing Company has just signed several leases and has hired FinCorp Inc. to do the initial classification of the leases as operating or financial for accounting purposes. White River could have bought each asset for $1 million instead of leasing. The appropriate discount rate is 10 percent per year; all lease payments are paid annually at the end of the year.
Classify each of the following leases as operating or financial and explain yourreasoning.

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Expected economic life of Annual lease Purchase price the asset 10 yearS years 10 years 9 years 25 years 10 years payments Length oflease at end of lease 8 years 2 years years 8 years 22 years years $175,000 $115,000 $30,000 $180,000 $110,000 $195,000 $10,000 $900,000 $500,000 $1,000 $8,000 $800,000