Question

Minimum lease payments may include a

a. penalty for failure to renew
b. bargain purchase option
c. guaranteed residual value
d. any of these

Answer 1

Minimum lease payments can include different elements such as penalty for failure to renew, bargain purchase option, or guaranteed residual value.

Step-by-step explanation:

Minimum lease payments can include various elements, such as a penalty for failure to renew, a bargain purchase option, or a guaranteed residual value. Therefore, the correct answer is d. any of these. Let's look at each of these elements:

1. Penalty for failure to renew: Some lease agreements may include a penalty if the lessee fails to renew the lease at the end of the term. This penalty encourages the lessee to renew the lease or face additional costs.
2. Bargain purchase option: A lease may provide the lessee with the option to purchase the leased asset at a significantly lower price compared to its market value. This option gives the lessee the opportunity to acquire the asset at a favorable price.
3. Guaranteed residual value: The lessor may guarantee a minimum value for the leased asset at the end of the lease term. This gives the lessee some certainty about the potential resale value of the asset.