Quiz Ch 25 – Reasons for Leasing
Principles of Corporate Finance
Brealey, Myers, and Allen
13th Edition
Which does NOT present a sensible rationale for leasing?
Which does NOT present a sensible rationale for leasing?
What are questionable rationales for choosing leasing over buying?
Which statements offer valid reasons for leasing?
Which statements offer valid reasons for leasing?
True or false: Unveiling the distinctive aspect of sale and lease-back, the firm sells an owned asset and then enters into a lease agreement to reacquire its use.
True or false: The evaluation of financial leases involves the discounting of lease cash flows using the company’s Weighted Average Cost of Capital (WACC).
True or false: Achieving optimal leasing benefits occurs when the lessor’s tax rate is markedly higher than that of the lessee.
True or false: A financial lease, characterized by its short-term and cancelable nature, stands in contrast to an operating lease, which is long-term and noncancelable.
True or false: In the lease versus buy decision, opt for purchasing if equivalent annual costs exceed external rates.
True or false: A practical rationale for leasing is the convenience offered by short-term lease arrangements.