Debt Displacement Is Associated with Leases Because

question 32

Multiple Choice

Debt displacement is associated with leases because:

• A) all assets not purchased with equity use debt financing.
• B) debt is always a cheaper source of financing and preferred to equity financing.
• C) FASB 13 and the IRS mandate debt displacement.
• D) lease financing is all debt and causes an imbalance in the optimal debt to equity ratio which reduces future debt financing.
• E) None of these.

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