In the Lease Versus Buy Decision,why Is Leasing Often Preferable

question 41

Multiple Choice

In the lease versus buy decision,why is leasing often preferable?

• A)because it has no effect on the firm's ability to borrow to make other investments
• B)because, generally, no down payment is required, and there are no indirect interest costs
• C)because lease obligations do not affect the firm's risk as seen by investors
• D)because the lessee may have greater flexibility in abandoning the project in which the leased property is used than if the lessee bought and owned the asset

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Definitions:

Customer Oriented

A business strategy focusing on creating a positive experience for customers through services and products tailored to their needs and feedback.

Differentiation

The practice of differentiating a product or service to make it appeal more to a specific target audience.

Strategy

A plan of action designed to achieve a long-term or overall aim, often involving the deployment of resources and decision-making processes.

Switching Costs

The costs that a consumer or company incurs as a result of changing from one supplier, product, or system to another.