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Which one of the following statements is correct? Multiple Choice The lessor is primarily concerned with...

Which one of the following statements is correct? Multiple Choice The lessor is primarily concerned with returning the asset at the end of the lease term without incurring any additional charges. The lessor is primarily concerned about the use of the asset. If a computer manufacturer leased computers it built to others, it would be engaging in leveraged leasing. A firm should always purchase, rather than lease, any asset that has a projected positive salvage value at the end of the relevant period of use. Lessors provide a source of financing for lessees.

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Answer #1

A lease is a contractual agreement between a lessor and lessee for the use of an asset.

A. Is wrong. The lessor leases the asset to the lessee.

B. Is wrong. The lessor is not primarily concerned about the use of the assets. The lessor will charge the lessee for the usage of assets.

C. Is wrong. Leveraged lease is where bank credit is used to buy assets.

D. Is wrong. Leasing can also be a cheaper source to use assets without buying.

E. Is correct. It is true that the lessor acts as a supplier of credit for the lessee. Lease financing is extensively used as a source of financing.

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