On April 1, 2021, a company signs a 20-month lease for equipment. Monthly payments of $554.15 begin on May 1, 2021. The company's normal borrowing rate is 12%. For what amount would the company record the lease on April 1, 2021 (rounded to nearest whole dollar)? Use (PV of $1, and PVA of $1) (Use appropriate factor(s) from the tables provided. Do not round interest rate factors.)
A) $12,000.
B) $11,083.
C) $10,000.
D) $10,800.
Answer: C
Which of the following represents an advantage of leasing rather than buying an asset with an installment note?
A) Leasing may offer protection against the risk of declining asset values.
B) Lease payments often are lower than installment payments.
C) Leasing offers flexibility and lower costs when disposing of an asset.
D) All of the other answer choices are correct.
Answer: D
Which of the following is the number one method of external financing by U.S. companies?
A) Issuing installment notes.
B) Leasing.
C) Issuing bonds.
D) Borrowing from banks.
Answer: B
