The term of the lease on a vehicle is about to expire. Answer Parts (a) and (b)
Question:
a. If the market value of the vehicle is less than the residual value, what should the lessee do?
b. If the market value of the vehicle exceeds the residual value, what should the lessee do?
c. In view of your answers to (a) and (b), will the interest rate on a lease contract tend to be higher or lower than the interest rate on a loan to purchase the same vehicle? Explain.
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a The lessee should not exercise the purchase option If the lessee wis...View the full answer
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