A Lease Where the Lessee Can Purchase the Asset at the Minimum

question 44

Multiple Choice

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

• A)$1.00 out lease.
• B)fixed price lease.
• C)fair market value lease.
• D)fair market value cap lease.

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Definitions:

Debt-Equity Ratio

This ratio quantifies the balance of equity and debt financing a company uses for its assets.

Capital Spending

Funds used by a company to acquire or upgrade physical assets such as property, industrial buildings, or equipment.

Retained Earnings

The part of net profits not distributed as dividends, instead kept by the company for reinvestment in its main business or for debt repayment.

Earnings Per Share

A company's profit divided by the number of outstanding shares of its common stock, indicating the company's profitability.