Your firm is considering leasing a $50,000 copier The copier has an estimated economic life of eight years Suppose the appropriate discount rate is 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 w...

a A fouryear fair market value lease with payments of 1150 per month PVLease Payments 1150 1 1 00912 ...

Your firm is considering leasing a $50,000 copier. The copier has an estimated economic life of eight

Question:

Your firm is considering leasing a $50,000 copier. The copier has an estimated economic life of eight years. Suppose the appropriate is 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 $1150 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 $1000 per month and an option to cancel after three years with a $9000 cancellation penalty

Discount Rate
Depending upon the context, the discount rate has two different definitions and usages. First, the discount rate refers to the interest rate charged to the commercial banks and other financial institutions for the loans they take from the Federal...