BUSINESS FIN CHAPTER 7

Which of the following is a benefit of leasing?

• Ownership of the asset

• Lower initial cost

• Higher long-term cost

Which of the following is an example of an asset that can be leased?

• Land

• Office equipment

• Stocks

Which of the following is a disadvantage of leasing?

• Limited flexibility

• Higher long-term cost

• Tax benefits

What is a capital lease?

• A lease where the lessee is responsible for maintenance

• A lease where the lessee has the option to purchase the asset

• A lease where the asset is considered to be owned by the lessee

Which of the following is true of a finance lease?

• The lessor owns the asset

• The lessee owns the asset

• The asset is returned to the lessor at the end of the lease term

Which of the following is a factor that affects lease payments?

• Inflation rate

• Asset age

• Interest rates

Which of the following is a common type of equipment leasing?

• Land leasing

• Vehicle leasing

• Stock leasing

Which of the following is an advantage of leasing?

• Limited liability

• No upfront costs

• Tax deductions

Which of the following is a disadvantage of leasing?

• No tax benefits

• Higher long-term cost

• No flexibility

What is a sale and leaseback transaction?

• The lessee sells an asset to the lessor and then leases it back

• The lessor sells an asset to the lessee and then leases it back

• The lessee sells an asset to a third party and then leases it back