If an Equivalent Loan Has the Same Cash Flows as a Lease

question 96

Multiple Choice

If an equivalent loan has the same cash flows as a lease, and results in a $1,500 higher present value, one could conclude that: present value than the lease analysis indicated, this shows:

• A)that leasing is preferable to buying the asset, since owning costs $1,500 more.
• B)that either is acceptable, since the cash flows are the same.
• C)one should not lease.
• D)that owning will require more capital up front.

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Definitions:

Hydraulic Booster Assemblies

Components designed to enhance the efficiency of hydraulic systems by increasing the pressure or force applied within the system.

Quick Release Valves

Quick Release Valves are components in air braking systems that allow for rapid exhaust of air from the brake chambers, facilitating faster release of the brakes and reducing brake release time.

Combination Valve

Used in a hydraulic brake system, it contains the safety switch, metering, and proportioning valves in a single valve body and usually is located close to the master cylinder. Also may refer to other multiple function valves such as the service, emergency, relay valve (SERV) used on air brake systems.

Hydraulic Brake System

A system in vehicles that uses fluid pressure to operate the brakes.