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What Is True Respecting the Economics Behind Leasing Arrangements

Question 50

Multiple Choice

What is true respecting the economics behind leasing arrangements?


A) By agreeing to provide a guarantee that the leased property will be worth at least a certain amount, the lessor assures the lessee that the property will be treated with due care.
B) A guaranteed residual value means that the lessee bears the risk and cost of the property falling below the specified value of the guarantee.
C) Since the lessor is assured of receiving the guaranteed amount (or more) , the guaranteed residual value does not form part of the minimum lease payment.
D) The bargain purchase option (BPO) is not part of the minimum lease payment even though a BPO is almost certain to be exercised.

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