Because Salvage Value Is a More Risky Estimate Than Others

question 108

Multiple Choice

Because salvage value is a more risky estimate than others in lease analysis, one might do one of the following:

• A)ignore salvage in one's calculations.
• B)use a higher, risk-adjusted discount rate for salvage value estimates.
• C)reduce the salvage value by half to account for risk.
• D)arrange to sell the asset ahead of time.

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