A firm that is cyclical in nature and requires extra equipment only during its peak periods should consider leasing that extra equipment using a(n) ________ lease.
A) operating
B) tax-oriented
C) sale and buyback
D) leveraged
E) financial

Question

Quizplus · Accepted Answer

An operating lease is the best choice for a firm that only requires extra equipment during peak periods because it is a short-term lease that provides the lessee with the benefits of the equipment without the costs of ownership, and the lessor retains ownership and responsibility for maintenance and repairs. This allows the firm to quickly and easily acquire the equipment they need for a limited amount of time, without committing to a long-term investment.

A Firm That Is Cyclical in Nature and Requires Extra