Which Statement Is Correct About "Agency Cost of Leasing

question 4

Multiple Choice

Which statement is correct about "agency cost of leasing"?

• A)Conditions can be added to the lease agreement to increase agency costs.
• B)Agency costs are nil if the lease contract covers the entire useful life of the asset.
• C)Assets that are easy to damage are better candidates for leasing.
• D)Assets that are difficult to damage have higher agency costs.

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Definitions:

Revenue Conditions

Refers to the factors that impact the revenue generation capabilities or situations of a business.

Liquidity Ratio

Financial metrics used to determine a company’s ability to pay off its short-term debts obligations with its liquid assets.

Generate Cash

The processes and strategies employed by businesses to increase liquidity and ensure sufficient funds are available for operational needs and investments.

Bill Payments

The process of settling financial obligations for services rendered or goods provided.