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1. Which of the following would not be a characteristic of a financial lease?

Group of answer choices

• They are not usually fully amortized.
• They usually do not include a cancellation option.
• The lessee usually has the right to renew the lease at expiration.
• All of the above are characteristics of financial leases.
• They usually do not have maintenance necessary for the leased assets.

2. An advantage of leasing is that the lessor does not own the asset and can cancel:

• only capital leases.
• any kind of leases anytime.
• only operating leases.
• None of these.
• only financial leas

3. Your firm is considering leasing a new computer. The lease lasts for 9 years. The lease calls for 10 payments of $1,000 per year with the first payment occurring immediately. The computer would cost $7,650 to buy and would be straight-line depreciated to a zero salvage value over 9 years. The actual salvage value is negligible because of technological obsolescence. The firm can borrow by issuing debt at a rate of 8%. The corporate tax rate is 30%.

This lease would be classified as a(n):

operating lease because there is no amortization.

operating lease because the asset will be obsolete.

sale and leaseback because the company gets full use of the asset.

capital lease because the lease life is greater than 75% of the economic life.

leveraged lease because it is being financed.

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