Answer to Question #324308 in Economics for Bea

Question

Kate owns her own bakery and leases her operating equipment, such as ovens and fridges, from EasyBake. The lease amount, which Kate pays back in regular installments, is determined in such a way that the value of the asset, plus an interest charge, is paid back by the end of the term of the lease, which is usually related to the lifespan of the asset. Which type of financial leasing agreement does Kate have with EasyBake?

Select one:

a.

Operating-lease agreement

b.

Direct financial leasing

c.

Leaseback agreement

d.

Lifespan leasing

Answer 1

a.

Operating-lease agreement