Question

Capitalized cost reductions are monies paid on the lease at its inception, including any down payment, trade-in value, or rebate. (True/False)

a) True
b) False

Answer 1

The statement is true; capitalized cost reductions constitute any initial payments that lower the overall lease cost, such as down payments, trade-ins, or rebates.

Step-by-step explanation:

The statement is true. Capitalized cost reductions on a lease involve any upfront payments that reduce the cost of the lease. These costs can include a down payment, trade-in value, or rebates. These payments are made at the beginning of the lease agreement to lower the monthly lease payments.

However, it is important to remember that while leasing may result in lower monthly payments, it may come with additional costs such as charges for exceeding a certain mileage limit, for instance, more than 10,000 miles per year.