Because Salvage Value Is a More Risky Estimate Than Others

question 90

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