Which Statement Is Correct About the "Guaranteed Residual Value

question 36

Multiple Choice

Which statement is correct about the "guaranteed residual value"?

• A)It is not included in the present value of the payment calculation.
• B)Lessee assumes the risk of the property falling below the guaranteed amount.
• C)Lessor assumes the risk of the property falling below the guaranteed amount.
• D)It is a non-lease cost in the lease arrangement.

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Definitions:

Residual Dividend Policy

A strategy where dividends are paid out of the remaining net income after meeting the company's investment needs.

Target Capital Structure

Target capital structure is the mix of debt, preferred stock, and common equity that a company aims to maintain to finance its operations and fund its growth.

Net Income

The final amount a company earns, post all deductions for expenses and taxes from its overall revenue.

Total Dividend Payment

The sum of all dividends a company pays out to its shareholders over a specific period.