When Will a Lower Lease Payment Possibly Arise

question 2

Multiple Choice

When will a lower lease payment possibly arise?

• A) a lower tax rate for the lessee
• B) a lower tax rate for the lessor
• C) a lower purchase cost for the asset
• D) a lower CCA tax shield

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Definitions:

Captive Finance Company

A finance company that is wholly owned by a parent company, primarily for the purpose of providing financing to the customers of the parent company.

Credit Function

The role of extending credit to consumers or businesses, enabling the purchase of goods or services before payment.

Controlled Disbursements

A cash management technique where companies strategically issue payments to regulate their cash outflows and maximize the available cash.

Junior Subsidiary

A subsidiary that ranks below other subsidiaries in claim on assets and earnings.