PRIN.OF CORPORATE FINANCE
PRIN.OF CORPORATE FINANCE
13th Edition
ISBN: 9781260013900
Author: BREALEY
Publisher: RENT MCG
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Chapter 25, Problem 1PS

Types of lease* The following terms are often used to describe leases:

  1. a. Direct
  2. b. Full-service
  3. c. Operating
  4. d. Financial
  5. e. Net
  6. f. Leveraged
  7. g. Sale and lease-back

Match one or more of these terms with each of the following statements:

  1. A. The initial lease period is shorter than the economic life of the asset.
  2. B. The initial lease period is long enough for the lessor to recover the cost of the asset.
  3. C. The lessor provides maintenance and insurance.
  4. D. The lessee provides maintenance and insurance.
  5. E. The lessor buys the equipment from the manufacturer.
  6. F. The lessor buys the equipment from the prospective lessee.
  7. G. The lessor finances the lease contract by issuing debt and equity claims against it.
Expert Solution & Answer
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Summary Introduction

To discuss: Match the given terms with the suitable statements.

Explanation of Solution

The given terms are matched with the appropriate statements as follows:

PRIN.OF CORPORATE FINANCE, Chapter 25, Problem 1PS

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