Assume that a piece of leased equipment has a relatively high rather than low expected residual value.From the lessee's viewpoint, it might be better to own the asset rather than lease it because with a high residual value the lessee will likely face a higher lease rate.

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A high expected residual value typically results in lower lease payments because the lessor anticipates recouping a significant portion of the asset's cost at the end of the lease term through the sale or re-lease of the asset. This can make leasing more attractive to the lessee compared to owning, especially if the lessee does not need or want to retain the asset at the end of the lease term.

Assume That a Piece of Leased Equipment Has a Relatively