Which of the Following Statements Is FALSE

question 4

Multiple Choice

Which of the following statements is FALSE?

• A)Lease payments are a fixed obligation of the firm.
• B)The risk of the lease payments is no greater than the risk of secured debt,so it is reasonable to discount the lease payments at the firm's secured borrowing rate.
• C)If a firm purchases a piece of equipment,the expense is a capital expenditure.Therefore,the purchase price can be depreciated over time,generating a depreciation tax shield.
• D)If the equipment is leased and the lease is a non-tax lease,there is no capital expenditure,but the lease payments are an operating expense.

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Definitions:

Resolving Conflict

The process of finding a peaceful solution to a disagreement between parties.

Submission

The action of presenting a document, proposal, or work for review, judgment, or consideration.

Role Reversal

A situation where individuals exchange their roles or behaviors, often used as a therapeutic technique or in training to develop empathy.

Empathy

The ability to understand and share the feelings of another person.