In the Lease Versus Buy Decision,why Is Leasing Often Preferable

question 41

Multiple Choice

In the lease versus buy decision,why is leasing often preferable?

• A)because it has no effect on the firm's ability to borrow to make other investments
• B)because, generally, no down payment is required, and there are no indirect interest costs
• C)because lease obligations do not affect the firm's risk as seen by investors
• D)because the lessee may have greater flexibility in abandoning the project in which the leased property is used than if the lessee bought and owned the asset

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Definitions:

HHI

The Herfindahl-Hirschman Index, a measure of market concentration used to evaluate the level of competition within an industry by summing the squares of the market shares of all firms.

Proposed Mergers

Suggested or planned combinations of two or more companies, aiming to enhance market share, reduce costs, or improve competitiveness.

HHI

Herfindahl-Hirschman Index, a measure of market concentration used to evaluate the potential for anti-competitive behavior in mergers and acquisitions.

Concentrated

A market structure described by a small number of firms holding a large market share, which can lead to reduced competition.