Which of the Following Statements Regarding Leases Is FALSE

question 1

Multiple Choice

Which of the following statements regarding leases is FALSE?

• A)Absent market imperfections,leases represent another form of zero-NPV financing available to a firm,and the Modigliani-Miller propositions apply: Leases neither increase nor decrease firm value,but serve only to divide the firm's cash flows and risks in different ways.
• B)In a perfect market,the cost of leasing is equivalent to the cost of purchasing and reselling the asset.
• C)Each lease agreement can be tailored to fit the precise nature of the asset and the needs of the parties at hand.
• D)Features of leases will be priced as part of the lease payment.Terms that give valuable options to the lessee lower the amount of the lease payments,whereas terms that restrict these options will raise them.

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Definitions:

Mature Ecosystem

An ecological community that has reached a stable stage of ecological succession, featuring well-established species relationships and biodiversity.

Nutrient Recycling

The process of reusing essential elements and compounds, such as carbon and nitrogen, within an ecosystem.

Energy Use

Pertains to the consumption of energy sources by human societies to power industries, homes, transportation, and other aspects of modern life.

Net Primary Productivity

The rate at which plants and other photosynthetic organisms produce organic compounds in an ecosystem beyond what they use for respiration.