A Lease Versus Purchase Analysis Should Compare the Cost of Leasing

question 17

Multiple Choice

A lease versus purchase analysis should compare the cost of leasing to the cost of owning, assuming that the asset purchased

• A) is financed with long-term debt.
• B) is financed with debt whose maturity matches the term of the lease.
• C) is financed with a mix of debt and equity based on the firm's target capital structure, i.e., at the WACC.
• D) is financed with retained earnings.
• E) is financed with short-term debt.

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Definitions:

Car Salesperson

An individual who specializes in selling cars, often employed by dealerships to facilitate transactions between the dealership and the buyer.

Ethical Behavior

Conduct based on recognized principles of right and wrong, guiding decisions and actions in a moral framework.

Sales Managers

Professionals responsible for directing and overseeing a company's sales team, focusing on meeting sales targets and developing sales strategies.

Ethical Training

Education and activities aimed at teaching individuals or employees about proper moral behavior and decision-making.