Please answer the question which is about financial statement analysis.

2. Operating lease to capital lease. You are analyzing the financial statements for Blue Tree Inc. In your analysis you notice the Blue Tree has a significant dollar amount of operating leases into the future; you are concerned with off-balance sheet financing. From the lease footnote disclosure, you have obtained the following information regarding operating leases for the next ten years: Year 1 Year 2 Year 3 Year 4 Year 5 Totals for Years 6-10 $550 $565 $580 $610 $640 $3,200 R You have also established that Blue Tree's cost of capital is 8%. Required: Convert Blue Tree's operating lease into a capital lease and demonstrate how this would be shown on the balance sheet. (20 points)