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.

An operating lease has which of the following characteristics? I. lessee has responsibility for the maintenance and insurance II. lease payments cover the full cost of the asset III. economic life of the asset exceeds the lease term IV. lessee can cancel the lease prior to the expiration date    A.  I and III only B.  II and IV only C.  I and II only D.  III and IV only E.  I, II, and III only Refer to section 27.1

12.	A financial lease:    A.  is generally called a capital lease by accountants. B.  requires the lessor to maintain the asset. C.  is a partially amortized lease. D.  is often called a single net lease. E.  can generally be cancelled without penalty. Refer to section 27.1

13.	A leveraged lease is a:    A.  lease where the lessee is the owner of the asset for tax purposes. B.  sale and leaseback arrangement. C.  type of operating lease. D.  lease paid with money borrowed by the lessee. E.  lease where the lessor borrows on a nonrecourse basis. Refer to section 27.1

14.

Which of the following apply to the lessee of a sale and leaseback arrangement? I. may have option to purchase asset at end of lease term II. receives cash from the sale of the asset III. maintains ownership rights IV. uses the asset    A.  I and IV only B.  II and III only C.  I, II, and IV only D.  II, III, and IV only E.  I, II, III, and IV Refer to section 27.1

15.	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