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CFP Final Questions And 100% Correct Answers
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CFP Final Questions And 100% Correct AnswersRonnie leases an auto from Uptown Motors and pays $225 a month as a lease payment.
Which one of the following terms applies to Uptown Motors? - ANSWER lessor
The party who uses a leased asset is called the - ANSWER lessee
Kate is renting some equipment for one year from Ajax Leasing, which also pays all the
maintenance, taxes, and insurance costs of this equipment. The useful life for this
equipment is 7 years. What type of lease does Kate have? - Answer operating
Maria has taken a non-cancelable 10 year lease on an industrial grade sewing machine.
For accounting purposes, this is considered to be a capital lease. The life of the sewing
machine is 12 years. Maria must pay all taxes, maintenance costs, and insurance
premiums related to this lease. What type of lease is this? - Answer financial
A financial lease in which the lessor is the owner for tax purposes is called a ________
lease - Answer tax-orientated
Equipment Rentals borrows money on a nonrecourse basis to fund its purchases of
construction equipment. This equipment is then leased to contractors. The leases are
classified as tax-orientated leases. Which one of the following terms best describes one
of these leases? - Answer leveraged lease
Brentwood Industries is selling its tool and die equipment to Upward Financial and then
leasing that equipment from Upward for a period of 10 years, which is the useful
remaining life of the equipment. What type of lease arrangement is this? - Sale and
leaseback
Which one of the following statements is correct? - Lessors provide a source of
financing for lessees
,in a direct lease, the - Answer lessor is generally an independent leasing company
an operating lease has which one of the following characteristics? - Answer the lessee
can cancel the lease prior to the expiration date
a financial lease: - Answer is generally called a capital lease by accountants
a leveraged lease is a: - Answer lease where the lessor borrows on a nonrecourse basis
which one of the following does not apply to the lessee of a sale and leaseback
arrangement - Answer retains ownership rights
a company that is highly seasonal in nature and only needs additional equipment for
their peak periods should lease that equipment with an _______ lease - Answer operating
a financial lease: - Answer can also be classified as a tax-orientated lease
If a firm does not expect to owe taxes for a few years and requires some equipment, the
firm generally should -Answer lease the equipment with the lessor retaining the tax
ownership of the asset.
If a lessor borrows money on a nonrecourse basis to purchase an asset to be leased to
another party, then the - Answer lessor is only required to make loan payments as long
as the lessor is collecting the lease payments
If a firm enters into a sale and leaseback agreement, then - Answer both the lessor and
lessee benefit.
an operating lease: - Answer appears in the footnotes but does not on the balance sheet
, which one of the following statements is correct concerning taxes and leasing? - Answer
tax reduction is a valid reason for leasing
the most cited reason why firms enter into lease agreements is to - Answer reduce
uncertainity
which of the following is most likely to be the primary reason why a lessee would choose
to lease an asset on a short-term basis rather than buy that asset? Ank to reduce total
cost
what do you call the model which calculates the present value of stock, based on its
next annual dividend, the dividend growth rate, and the applicable discount rate? Ank
dividend growth
Which of the following is a type of equity security that pays a fixed dividend and has a
priority status in relation to the other equity securities? -Answer preferred stock
What does the term describe when a corporation distributes either cash or additional
shares to its shareholders? -Answer dividends
emst & frank stock is listed on NASDAQ. the firm is planning to issue some new equity
shares for sale to the general public. this sale will definitely occur in which of the
following markets? - Answer primary
the secondary market is best defined by which one of the following? - Answer market
where outstanding shares of stock are resold
a decrease in which of the following, according to the dividend growth model will
increase the current value of a stock? - Answer discount rate
the dividend growth model: - Answer the growth rate has to be lower than the required
return
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