Which of the Following Is Not an Advantage of a Lease

question 23

Multiple Choice

Which of the following is not an advantage of a lease financing arrangement?

• A) Companies with losses can still depreciate equipment if leased from a finance company.
• B) Repossession is easier in a lease-finance arrangement because the finance company already owns the equipment.
• C) Finance companies are in a good position to sell a repossessed asset, especially if they are a subsidiary of the equipment manufacturer.
• D) The lessee often does not have to make as large of an upfront payment, relative to a straight loan.

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Definitions:

Capital Formation

The process of accumulating assets and investments that are used for future production or economic growth.

World Bank

An international monetary organization granting loans and finances to governments of less affluent countries for capital project undertakings.

Developing Nations

Countries with lower levels of industrialization, lower standards of living, and lower Human Development Index (HDI) scores compared to more developed countries.

Labor Productivity

The output of goods and services produced per unit of labor input, often used as an indicator of economic efficiency.