A Lease Versus Purchase Analysis Should Compare the Cost of Leasing

question 13

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

---

Definitions:

BMC Component

An essential element of the Business Model Canvas, a strategic management tool for developing new or documenting existing business models.

Customer Segments

The process of dividing a market of potential customers into groups, or segments, based on different characteristics.

Channels

Pathways or mediums through which products or services are distributed to the end consumer.

Infrastructure

The fundamental facilities and systems serving a country, city, or area, including transportation, communication, utilities, and public institutions, necessary for economic activity.