Test Bank For
Fundamentals of Corporate
th
Finance 13 Edition By Ross,
Westerfield, Jordan
(All Chapters 1-27, 100%
Original Verified, A+ Grade)
All Chapters Arranged
Reverse: 27-1
This is The Original Test Bank
For 13th Edition, All other
Files in The Market are
Fake/Old/Wrong Edition.
,Chapter 27
Student name:__________
1) Jalen pays $525 per month to lease a car from Blue Auto Group. In this transaction, Blue
Auto Group is the:
A) lessee.
B) lessor.
C) guarantor.
D) trustee.
E) manager.
2) The party who uses a leased asset is called the:
A) lessee.
B) lessor.
C) guarantor.
D) trustee.
E) manager.
3) Carley has leased a treadmill from Village Leasing for a period of one year. Village pays the
maintenance, taxes, and insurance costs for this equipment. The life of the equipment is
seven years. Carley has a(n) ________ lease.
A) open
B) straight
C) operating
D) financial
E) tax-oriented
4) Anusha has a fully amortized 10-year lease on some heavy equipment. The lease requires her
to pay all taxes, maintenance costs, and insurance premiums related to this lease. Which type
of lease is this?
A) Open
B) Straight
C) Operating
D) Financial
E) Tax-oriented
Version 1 1
,Chapter 27
5) A financial lease in which the lessor is the owner for tax purposes is called a(n) _____ lease.
A) open
B) straight
C) operating
D) tax-oriented
E) tax-exempt
6) 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-oriented leases. Which one of the following terms best describes one of these
leases?
A) Leveraged lease
B) Sale and leaseback arrangement
C) Single-investor lease
D) Perpetual lease
E) Straight lease
7) Lakhani Equipment borrows money to purchase equipment which it then leases to customers.
Lakhani must pay its loan payments on this equipment even if Lakhani’s customers fail to
pay their lease payments. Which one of the following terms best describes one of these
leases?
A) Single-investor lease
B) Sale and leaseback arrangement
C) Operating lease
D) Perpetual lease
E) Straight lease
8) Mougia Manufacturing sells equipment to Hooper Finance. Hooper Finance leases that
equipment to Mougia for a period of 15 years. The equipment has a remaining useful life of
15 years. Which type of lease arrangement is this?
A) Leveraged lease
B) Sale and leaseback
C) Operating lease
D) Tax-oriented lease
E) Straight lease
Version 1 2
, Chapter 27
9) Which one of the following statements is correct?
A) The lessor is primarily concerned with returning the asset at the end of the lease term
without incurring any additional charges.
B) The lessor is primarily concerned about the use of the asset.
C) If a computer manufacturer leased computers it built to others, it would be engaging
in leveraged leasing.
D) 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.
E) Lessors provide a source of financing for lessees.
10) In a direct lease, the:
A) lessor is the end user of the leased asset.
B) lessee rents the asset from the manufacturer.
C) lessor is generally an independent leasing company.
D) lessee owns the asset.
E) lessee purchases the asset from the manufacturer.
11) An operating lease has which one of the following characteristics?
A) The economic life of the asset equals the lease term.
B) The lessee has responsibility for the maintenance and insurance.
C) The lease payments recover the full cost of the asset.
D) The lessee can cancel the lease prior to the expiration date.
E) The lease term is relatively long term.
12) A financial lease:
A) is generally called a capital lease by accountants.
B) requires the lessor to maintain the asset.
C) is a partially amortized lease.
D) is often called a single net lease.
E) can generally be cancelled without penalty.
Version 1 3
Fundamentals of Corporate
th
Finance 13 Edition By Ross,
Westerfield, Jordan
(All Chapters 1-27, 100%
Original Verified, A+ Grade)
All Chapters Arranged
Reverse: 27-1
This is The Original Test Bank
For 13th Edition, All other
Files in The Market are
Fake/Old/Wrong Edition.
,Chapter 27
Student name:__________
1) Jalen pays $525 per month to lease a car from Blue Auto Group. In this transaction, Blue
Auto Group is the:
A) lessee.
B) lessor.
C) guarantor.
D) trustee.
E) manager.
2) The party who uses a leased asset is called the:
A) lessee.
B) lessor.
C) guarantor.
D) trustee.
E) manager.
3) Carley has leased a treadmill from Village Leasing for a period of one year. Village pays the
maintenance, taxes, and insurance costs for this equipment. The life of the equipment is
seven years. Carley has a(n) ________ lease.
A) open
B) straight
C) operating
D) financial
E) tax-oriented
4) Anusha has a fully amortized 10-year lease on some heavy equipment. The lease requires her
to pay all taxes, maintenance costs, and insurance premiums related to this lease. Which type
of lease is this?
A) Open
B) Straight
C) Operating
D) Financial
E) Tax-oriented
Version 1 1
,Chapter 27
5) A financial lease in which the lessor is the owner for tax purposes is called a(n) _____ lease.
A) open
B) straight
C) operating
D) tax-oriented
E) tax-exempt
6) 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-oriented leases. Which one of the following terms best describes one of these
leases?
A) Leveraged lease
B) Sale and leaseback arrangement
C) Single-investor lease
D) Perpetual lease
E) Straight lease
7) Lakhani Equipment borrows money to purchase equipment which it then leases to customers.
Lakhani must pay its loan payments on this equipment even if Lakhani’s customers fail to
pay their lease payments. Which one of the following terms best describes one of these
leases?
A) Single-investor lease
B) Sale and leaseback arrangement
C) Operating lease
D) Perpetual lease
E) Straight lease
8) Mougia Manufacturing sells equipment to Hooper Finance. Hooper Finance leases that
equipment to Mougia for a period of 15 years. The equipment has a remaining useful life of
15 years. Which type of lease arrangement is this?
A) Leveraged lease
B) Sale and leaseback
C) Operating lease
D) Tax-oriented lease
E) Straight lease
Version 1 2
, Chapter 27
9) Which one of the following statements is correct?
A) The lessor is primarily concerned with returning the asset at the end of the lease term
without incurring any additional charges.
B) The lessor is primarily concerned about the use of the asset.
C) If a computer manufacturer leased computers it built to others, it would be engaging
in leveraged leasing.
D) 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.
E) Lessors provide a source of financing for lessees.
10) In a direct lease, the:
A) lessor is the end user of the leased asset.
B) lessee rents the asset from the manufacturer.
C) lessor is generally an independent leasing company.
D) lessee owns the asset.
E) lessee purchases the asset from the manufacturer.
11) An operating lease has which one of the following characteristics?
A) The economic life of the asset equals the lease term.
B) The lessee has responsibility for the maintenance and insurance.
C) The lease payments recover the full cost of the asset.
D) The lessee can cancel the lease prior to the expiration date.
E) The lease term is relatively long term.
12) A financial lease:
A) is generally called a capital lease by accountants.
B) requires the lessor to maintain the asset.
C) is a partially amortized lease.
D) is often called a single net lease.
E) can generally be cancelled without penalty.
Version 1 3
