Which Statement Is True

question 25

Multiple Choice

Which statement is true?

• A)The guaranteed residual value is provided by the lessor.
• B)The bargain purchase option is not a part of the lease payment calculation.
• C)The incremental borrowing rate is the interest rate that the lessor would have to pay on a similar lease or loan.
• D)One of the risks of ownership is the risk of obsolescence.

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Definitions:

Sales Increase

A rise in the volume or value of product units or services sold by a company, indicating growth in business activity.

Retention Ratio

The proportion of net income that is retained in the business rather than distributed to shareholders as dividends.

Dividend Payout Ratio

A financial indicator showing the proportion of a company's profits distributed to its shareholders as dividends.

Net Income

The total profit of a company after all expenses and taxes have been subtracted from revenues. It's often referred to as the bottom line.