L4M7 Exam Dumps | An organization might find it more beneficial to lease and use an asset over a predetermined period.

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Question 100/121

An organization might find it more beneficial to lease and use an asset over a predetermined period. After this period, the lessee has the right to secure outright ownership of the asset by paying an agreed amount; otherwise, the asset would be repossessed by the lessor. Which of the following is an advantage of leasing?

A. Long-term commitment to pay installments even if not using the asset

B. Costs are known and agreed in advance

C. The usage of the asset is usually capped

D. The total cost of ownership is not applicable as the asset is leased

Correct Answer: B

Leasing allows an organization to predict costs accurately, as installment payments are pre-agreed. This makes financial planning simpler, which is especially beneficial in whole-life asset management where minimizing upfront capital expenditure is often a priority. Leasing also reduces the risk associated with asset obsolescence.

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