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

question 43

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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