CIPS L4M7 Exam - Topic 7 Question 72 Discussion

Actual exam question for CIPS's L4M7 exam

Question #: 72
Topic #: 7

An organization might find it more beneficial to lease and use an asset over a predetermined period. After this period, the lessee has the right to secure outright ownership of the asset by paying an agreed amount; otherwise, the asset would be repossessed by the lessor. Which of the following is an advantage of leasing?

ALong-term commitment to pay installments even if not using the asset

BCosts are known and agreed in advance

CThe usage of the asset is usually capped

DThe total cost of ownership is not applicable as the asset is leased

Show Suggested Answer

Suggested Answer: B

Leasing allows an organization to predict costs accurately, as installment payments are pre-agreed. This makes financial planning simpler, which is especially beneficial in whole-life asset management where minimizing upfront capital expenditure is often a priority. Leasing also reduces the risk associated with asset obsolescence.

by Nickole at May 05, 2026, 10:09 AM

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Allene

3 days ago

I'm not entirely sure, but I remember something about how leasing avoids long-term commitments, so maybe option B is correct?

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Hillary

8 days ago

I think leasing can be beneficial because the costs are known and agreed in advance, which helps with budgeting.

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