The Point Where a Lessee Is Indifferent Between Leasing and Buying

question 24

Multiple Choice

The point where a lessee is indifferent between leasing and buying is the point where the:

• A) Total cash outlays for lease payments are equivalent to the purchase cost of the asset.
• B) Net present value from leasing is equal to zero.
• C) Total cash flows minus the depreciation tax shield are equal to zero.
• D) Tax savings from leasing equal the tax savings from buying.
• E) Net present value from leasing is positive.

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Definitions:

Sulfonamides

A group of synthetic antibiotics that contain the sulfonamide group and are used to treat bacterial infections.

Analgesics

Medications designed to relieve pain without causing loss of consciousness.

Diuretics

Medications designed to increase urine production to help reduce excess fluid in the body.

Excretory

Pertaining to the process of eliminating waste products from the body's metabolism.