Question

Which of the following is a characteristic of the system of equipment leasing by industrial exporters?

A) The terms of the leases usually run twenty to thirty years.
B) It is more difficult to lease than sell new, experimental equipment.
C) Lease revenue tends to be less stable over a period of time than direct sales would be.
D) Countries where leasing is most attractive are those where spiraling inflation does not occur.
E) Leasing incurs greater risk than does outright sale of the equipment.

Answer 1

The most accurate characteristic of equipment leasing by industrial exporters is that lease revenue is less stable than direct sales, as it's affected by variabilities such as economic conditions and fluctuating equipment demand.

Step-by-step explanation:

The characteristic of the system of equipment leasing by industrial exporters which is most accurate is that lease revenue tends to be less stable over a period of time than direct sales would be. This instability is attributed to factors such as changes in economic conditions, fluctuating demand for leased equipment, and potential contractual adjustments.

Leasing is inherently associated with fixed costs, such as the ones for the rented space and machinery, which remain constant regardless of production levels. These fixed costs endure until the lease expires. In addition, it is important to note that leasing allows businesses to avoid committing extensive capital in the short term, which can be advantageous when the initial expenditure for machinery or a factory is high.

The characteristic of the system of equipment leasing by industrial exporters is that lease revenue tends to be less stable over a period of time than direct sales would be.