Leasing and Hire Purchase

The act of buying an asset without having to make full payment in the immediate future is known as:

• Sale and leaseback

• Operating lease

• Hire purchase

• Finance lease

A way to analyze whether debt or lease financing would be preferable is to:

• compare the net present values under each alternative, using the cost of capital as the discount rate.

• compare the net present values under each alternative, using the after-tax cost of borrowing as the discount rate.

• compare the payback periods for each alternative.

• compare the effective interest costs involved for each alternative.

The principal reason for the existence of leasing is that:

• Intermediate-term loans are difficult to obtain.

• This is a type of financing unaffected by changes in tax law.

• Companies, financial institutions, and individuals derive different benefits from owning assets.

• Leasing is a renewable source of intermediate-term funds.

The type of lease that includes a third party, a lender, is called a

• Sale and leaseback.

• Direct leasing arrangement.

• Leveraged lease.

• Operating lease.

A direct lease, a sale and leaseback, and a leveraged lease are all examples of

• Operating leases.

• Financial leases.

• Full-service leases.

• "Off-balance sheet" methods of financing.

If the firm stops making repayments and the goods or assets are taken away from them as a result, this is known as:

• Cancellation

• Forfeiture

• Repossession

• Annulment

In Hire Purchase, the person who sells the goods to the buyer is known as ----------.

• Hire Purchaser

• Buyer

• Hire Vendor

Following is the disadvantage of Lease Agreement to the Lessee.

• Has to bear the costs of repairs and maintenance

• Total cost is more than on taking the asset on loan

• Both a and b

If the Lessor and Lessee are situated in two different countries, the type of lease is known as----------

• Cross Border Lease

• Financial Lease

• Operating Lease

Under this type of Lease the Lessor can Lease the Asset to more than one person.

• a) Financial Lease

• b) Leveraged Lease

• c) Operating Lease