If Your Equivalent Loan Analysis of a Lease Shows a Higher

question 25

True/False

If your equivalent loan analysis of a lease shows a higher immediate cash flow for the borrowing plan, based on the same cash flows as the lease, then one should not lease.

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Definitions:

Implicit Costs

The opportunity costs of using resources owned by the firm for its own production, instead of earning income elsewhere.

Explicit Costs

Direct, out-of-pocket payments made for the operation of a business, such as wages, rent, and materials.

Accounting Profits

The difference between total revenues and explicit costs, representing the net income reported on a company's financial statements.