Which one of the following statements is correct concerning the lease versus buy decision?
A)The lessor is primarily concerned with returning the asset at the end of the lease term without incurring any additional charges.
B)The lessor is primarily concerned about the use of the asset.
C)If Dell Computer became a lessor of its own computers it would be engaging in direct leasing.
D)A firm should always purchase, rather than lease, any asset that has a projected positive salvage value at the end of the relevant period of use.
E)Lessors provide a source of financing for lessees.

Question

Quizplus · Accepted Answer

Lessors provide a source of financing for lessees, making leasing an attractive option for firms that may not have the cash available to purchase an asset outright or do not want to tie up their cash in a long-term investment. Option A and B are incorrect as both the lessor and lessee are concerned with the use and return of the asset. Option C is incorrect, as Dell Computer engaging in direct leasing would mean leasing its computers to third-party customers, not leasing its own computers. Option D is incorrect because an asset's projected positive salvage value does not necessarily mean it is always better to purchase rather than lease.

Which One of the Following Statements Is Correct Concerning the Lease