Under What Situation Should an Asset Be Leased

question 14

Multiple Choice

Under what situation should an asset be leased?

• A) when the NPV is positive and the NAL is also positive
• B) when the NPV is positive but the NAL is negative
• C) when the NPV is negative and the NAL is negative too
• D) when the NPV is negative and the NAL is positive, but smaller than the NPV

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Definitions:

Horizontal Equity

The principle that individuals in similar financial conditions should be treated equally by the taxation system.

Vertical Equity

A principle in taxation that states taxpayers with a greater ability to pay should contribute more in taxes.

Regressive Tax

A tax for which high-income taxpayers pay a smaller fraction of their income than do low-income taxpayers.

Federal Tax Receipts

The revenue collected by the federal government from various taxes like income tax, corporation tax, and other levies.