Which of the Following Statements Is FALSE

question 15

Multiple Choice

Which of the following statements is FALSE?

• A)Because we are getting the entire asset when we purchase it with the loan,the loan payments are higher than the lease payments.
• B)In a perfect market,the cost of leasing and then purchasing the asset is equivalent to the cost of borrowing to purchase the asset.
• C)With a lease we are financing the entire cost of the asset,with a standard loan we are financing only the cost of the economic depreciation of the asset during its life.
• D)The amount of the lease payment will depend on the purchase price,the residual value,and the appropriate discount rate for the cash flows.

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Definitions:

Tax Per Unit

A fixed amount of tax imposed on a product or service, regardless of its price.

Excise Tax

A tax applied to specific goods, services, or transactions, usually with the intent of discouraging their use or generating revenue.

Tax Per Unit

A specific tax levied on a product based on the number of units purchased, not the value of the purchase.

Efficiency Loss

The loss of economic efficiency that can occur when equilibrium for a good or a service is not achieved or is not achievable.