Omega leased a machine for a ten-year non-cancelable term. At the end of the ten-year term, Omega has five consecutive one-year renewal options. A replacement machine can be acquired at the end of the term for the leased machine, but due to an expensive installation process and Omega's lease term for its store, Omega expects to lease the machine for 12 years. What is the lease term?
A) 10 years
B) 11 years
C) 12 years
D) 15 years

Question

Quizplus · Accepted Answer

The lease term consists of ten years plus two renewal years, or 12 years, because the expensive installation now means that Omega is reasonably certain to exercise two of its one-year renewal options.

Omega Leased a Machine for a Ten-Year Non-Cancelable Term