CAF-6 · Chapter 3 · Question 13 of 15
What is 'Net investment in the lease' from a lessor's perspective?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Gross investment in the lease minus unearned finance income.
Explanation
Net investment in the lease is defined as the gross investment (undiscounted lease payments plus unguaranteed residual value) discounted at the interest rate implicit in the lease. This equals gross investment minus unearned finance income.
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