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CIPS L4M7 Exam - Topic 7 Question 72 Discussion

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?
B) Costs are known and agreed in advance
A) Long-term commitment to pay installments even if not using the asset
C) The usage of the asset is usually capped
D) The total cost of ownership is not applicable as the asset is leased

CIPS L4M7 Exam - Topic 7 Question 72 Discussion

Actual exam question for CIPS's L4M7 exam
Question #: 72
Topic #: 7
[All L4M7 Questions]

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?

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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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Shanice
8 hours ago
Totally agree with B! No surprises!
upvoted 0 times
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Rebbecca
6 days ago
I disagree, A is a downside for sure.
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Ulysses
11 days ago
B is definitely a plus! Costs are clear.
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Nieves
16 days ago
I recall that leasing can sometimes limit usage, but I don't think that's an advantage, so I’m leaning towards option B as the best choice.
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Pansy
2 months ago
I feel like I came across a similar question where the focus was on the flexibility of leasing, which might relate to option D.
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Allene
2 months ago
I'm not entirely sure, but I remember something about how leasing avoids long-term commitments, so maybe option B is correct?
upvoted 0 times
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Hillary
2 months ago
I think leasing can be beneficial because the costs are known and agreed in advance, which helps with budgeting.
upvoted 0 times
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