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A lessee should calculate the present value of a lease by discounting its cash flows at the same rate used to determine the present value of its


A) proposed projects.
B) debt.
C) pension fund.
D) sales.
E) dividends.

F) B) and C)
G) B) and E)

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Operating leases often have terms that include


A) full amortization over the life of the lease.
B) very high penalties if the lease is canceled.
C) restrictions on how much the leased property can be used.
D) much longer lease periods than for most financial leases.
E) maintenance of the equipment by the lessor.

F) C) and D)
G) B) and E)

Correct Answer

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