Which of the Following Is Probably Not a Good Reason

question 1

Multiple Choice

Which of the following is probably not a good reason for leasing instead of buying?

• A)Leasing may provide off-balance sheet financing.
• B)Leasing may reduce administrative and transaction costs.
• C)There is no limit on the company's ability to deduct lease payments when calculating tax liability.
• D)All of these options are good reasons for leasing.

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Definitions:

Present Value

Today's value of a future money sum or cash flow sequence, calculated using a predetermined return rate.

Lifecycle

The series of stages that an entity—such as a product, project, or individual—goes through during its existence, from inception to termination or renewal.

Marginal Cost

The increase or decrease in the total cost that arises from producing one additional unit of a product or service.

Breakeven Price

The sales amount at which a business neither makes a profit nor incurs a loss, covering all its costs.