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Fundamentals of Financial Manageme...

14th Edition
Eugene F. Brigham + 1 other
ISBN: 9781285867977

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BuyFindarrow_forward

Fundamentals of Financial Manageme...

14th Edition
Eugene F. Brigham + 1 other
ISBN: 9781285867977
Textbook Problem

Distinguish between operating leases and financial leases. Would a firm be more likely to finance a fleet of trucks or a manufacturing plant with an operating lease? Explain.

Summary Introduction

To Determine: The difference between operating lease and financial leases and the reasons on whether a firm be prospective to invest on a fleet of trucks or industrialized plant with operating lease.

Introduction: A lease is characterized as an agreement between a lessee and a lessor for the contract of a particular asset for a particular period on payment of determined rents.

Explanation

The difference between operating lease and financial leases and the reasons on whether a firm be prospective to invest on a fleet of trucks or industrialized plant with operating lease are as follows:

An operating lease is as often cancellable and incorporates maintenance. Operating leases are for a period essentially shorter than the asset's monetary life, consequ...

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