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Which of the following statements regarding operating leases is FALSE?

Free

Multiple Choice

Answer:

Answer:

A

A lease where the lessee can purchase the asset at the minimum of its fair market value and a fixed price is called a:

Free

Multiple Choice

Answer:

Answer:

D

A lease will be treated as a non-tax lease if it satisfies any of the following conditions,EXCEPT:

Free

Multiple Choice

Answer:

Answer:

A

The lease is treated as a capital lease (financial lease)for the lessee and must be listed on the firm's balance sheet if it satisfies any of the following conditions,EXCEPT:

Multiple Choice

Answer:

Use the information for the question(s)below.
Suppose the purchase price of a bulldozer is $90,000,its residual value in four years is certain to be $15,000,and there is no risk that the lessee will default on the lease.Assume that capital markets are perfect and the risk-free interest rate is 6% APR with monthly compounding.
-Calculate the monthly lease payments for a four-year fixed price lease that allows the lessee to buy the bulldozer at the end of the lease for $8000.

Essay

Answer:

Use the information for the question(s)below.
Suppose the purchase price of a bulldozer is $90,000,its residual value in four years is certain to be $15,000,and there is no risk that the lessee will default on the lease.Assume that capital markets are perfect and the risk-free interest rate is 6% APR with monthly compounding.
-The monthly lease payments for a four-year lease of the bulldozer are closest to:

Multiple Choice

Answer:

Use the information for the question(s)below.
Suppose the purchase price of a bulldozer is $90,000,its residual value in four years is certain to be $15,000,and there is no risk that the lessee will default on the lease.Assume that capital markets are perfect and the risk-free interest rate is 6% APR with monthly compounding.
-Calculate the monthly lease payments for a four-year $1.00 out lease of the bulldozer.

Essay

Answer:

A lease that gives the lessee the option to purchase the asset at its fair market value at the termination of the lease is called a:

Multiple Choice

Answer:

Use the information for the question(s)below.
Suppose the purchase price of a bulldozer is $90,000,its residual value in four years is certain to be $15,000,and there is no risk that the lessee will default on the lease.Assume that capital markets are perfect and the risk-free interest rate is 6% APR with monthly compounding.
-Suppose that instead of leasing the bulldozer,the company is considering purchasing a bulldozer outright by borrowing the purchase price using a four-year annuity loan.The monthly loan payments for a four-year loan to purchase the bulldozer are closest to:

Multiple Choice

Answer:

A lease where ownership of the asset transfers to the lessee at the end of the lease for a nominal cost is called a:

Multiple Choice

Answer:

A lease where the lessee has the option to purchase the asset at the end of the lease for a price that is set upfront in the lease contract is called a:

Multiple Choice

Answer: