If a Lease Analysis Shows Exactly the Same Present Value

question 1

Multiple Choice

If a lease analysis shows exactly the same present value as an equivalent loan, the lessee should:

• A)choose to lease or buy based on other criteria.
• B)lease, since there are more tax shelters.
• C)buy, because the salvage might be bigger than estimated.
• D)neither lease nor buy, since the asset choice is clearly wrong.

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Definitions:

Creep

The slow movement of soil or rock down a slope, driven by gravity.

Slither

To move smoothly over a surface with a continuous gliding motion, often applied to the movement of snakes or similar creatures.

Elastic Material

Elastic material is a substance able to return to its original shape after being stretched or compressed, exemplified by rubber.

Stored Energy

Refers to potential energy that is held within an object or substance, awaiting release to perform work or generate force.