Instead of Increasing Its Long-Term Debt by Borrowing Money to Purchase

question 42

Multiple Choice

Instead of increasing its long-term debt by borrowing money to purchase new stereo equipment,Jay's Jams Inc.decides to lease the equipment.How does this affect its long-term debt ratio?

• A) It will decrease.
• B) It will increase.
• C) It will remain unchanged.
• D) The effects are unknown without the amount of the lease obligation.

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