The Point Where a Lessee Is Indifferent Between Leasing and Buying

question 21

Multiple Choice

The point where a lessee is indifferent between leasing and buying is the point where the:

• A) Total cash outlays for lease payments are equivalent to the purchase cost of the asset.
• B) Net present value from leasing is equal to zero.
• C) Total cash flows minus the depreciation tax shield are equal to zero.
• D) Tax savings from leasing equal the tax savings from buying.
• E) Net present value from leasing is positive.

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Definitions:

Geographic Isolation

A mechanism of evolutionary separation where populations of a species are physically separated by geographic barriers leading to species divergence.

Natural Selection

The process by which organisms better adapted to their environment tend to survive and produce more offspring, a key mechanism of evolution.

Galápagos Islands

The Galápagos Islands are an archipelago of volcanic islands located in the Pacific Ocean, renowned for their unique and diverse ecosystems which played a significant role in the development of Charles Darwin's theory of natural selection.

Disruptive Selection

Outcome of natural selection in which the two extreme phenotypes are favored over the average phenotype, leading to more than one distinct form.