Which of the Following Is Not a Normally Attractive Feature

question 26

Multiple Choice

Which of the following is not a normally attractive feature of an operating lease?

• A)the lessee has the option to cancel.
• B)the lessee only needs the equipment for a short time.
• C)the lessee can't afford to buy the asset.
• D)the lessor offers superior and cheaper maintenance than the lessee can perform.

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Definitions:

Straight-Line Amortization

A method of evenly distributing the cost of an intangible asset over its useful life.

Total Interest Cost

The sum of all interest payments over the life of a loan, reflecting the true cost of borrowing.

Interest Paid

The amount paid by a borrower to a lender for the privilege of using borrowed money, typically expressed as an annual percentage of the loan outstanding.

Bond Discount

The gap between the nominal value of a bond and the price it fetches on the market when it is sold for an amount lower than its nominal value.