Question
Which of the following tends to be a characteristic of a finance lease? Group of answer choices (a) The lease provides off-balance sheet financing in
Which of the following tends to be a characteristic of a finance lease?
Group of answer choices
(a) The lease provides off-balance sheet financing in most countries so that it does not affect the lessees ability to borrow money as well as its tax liability.
(b) The risks of ownership tend to be borne by the lessor.
(c) This can be thought of as a call option given that the lessee will choose to pay the fixed lease payment when the present value of cash flows from the asset turns out to be greater than the lease payment required.
(d) Due to the substantial penalty that will be incurred if the firm cancels the lease contract, it reduces some of the debt capacity of the firm.
(e) None of the above.
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