A Lease-Versus-Purchase Analysis Should Compare the Cost of Leasing to the Cost

question 10

Multiple Choice

A lease-versus-purchase analysis should compare the cost of leasing to the cost of owning,assuming that the asset purchased

• A) is financed with short-term debt.
• B) is financed with long-term debt.
• C) is financed with debt whose maturity matches the term of the lease.
• D) is financed with a mix of debt and equity based on the firm's target capital structure,i.e. ,at the WACC.
• E) is financed with retained earnings.

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Definitions:

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