Which One of These Statements Is Correct Concerning the Lease

question 210

Multiple Choice

Which one of these 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 lessee is primarily concerned about the use of the asset.
• C) If Dell Computer became a lessor of its own computers it would be doing direct leasing.
• D) A firm should always purchase an asset rather than lease it if the asset has a positive salvage value.
• E) Dell Computer would be a captive finance company if it became a lessor of its own computers.

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Definitions:

Simple Interest

Interest calculated on the principal amount of a loan or deposit, without compounding.

Loan Balance

The amount of money that remains to be paid on a loan.

Student Loans

Money borrowed to pay for education expenses, which must be repaid with interest.

Principal

The initial sum of money borrowed in a loan or put into an investment, exclusive of any interest or dividends.