In Which of the Following Situations Would You Have to Pay

question 176

Multiple Choice

In which of the following situations would you have to pay additional money when returning a vehicle using an open-end lease?

• A)Residual value is less than expected.
• B)Residual value is more than expected.
• C)Mileage limits were exceeded.
• D)Both a and c apply.
• E)Both b and c apply.

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Definitions:

Required Rate

This is often referred to as the minimum acceptable return on an investment, set by investors or managers.

Payback

The amount of time it takes for an investment to generate an amount of income or cash flow to recover its initial cost.

Annual Cash Flows

The total amount of money being transferred in and out of a business, measured yearly.

Required Rate

The minimum return that investors demand for investing in a particular asset, reflecting the risk of the investment.