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Java Hut leased a specialty expresso machine for a 10-year non-cancelable term. At the end of the 10-year term, Java Hut has four consecutive one-year renewal options. A replacement machine can be acquired, but due to an expensive installation process and Java Hut’s lease term for its store, Java Hut expects to lease the machine for 12 years. What is the lease term?

Respuesta :

Answer:

The lease term is 12 years.

Explanation:

Lease can be described as the noncancelable period during which there is a right to use an underlying asset by the lessee plus the optional periods during which there is a high degree of certainty that the renewal option will be exercised by the lessee, or during which the termination option will not be exercised by the lessee, or during which the lessor controls the exercise of those option.

Based on the above description, the lease term is 12 years since ava Hut expects to lease the machine for 12 years.

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