A firm that is very cyclical in nature and requires extra equipment only during its peak periods should consider leasing that 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 a type of lease agreement in which the lessee rents the equipment for a specific period without any obligation to purchase it at the end of the lease term. Operating leases are generally used for short-term arrangements and provide the lessee with flexibility in terms of returning the equipment after the lease term. This type of lease is particularly suitable for a firm that requires extra equipment only during its peak periods as it allows them to use the equipment for a limited time without incurring the full cost of purchasing and maintaining it.

A Firm That Is Very Cyclical in Nature and Requires