Which of the Following Statements Is FALSE

question 4

Multiple Choice

Which of the following statements is FALSE?

• A)Lease payments are a fixed obligation of the firm.
• B)The risk of the lease payments is no greater than the risk of secured debt,so it is reasonable to discount the lease payments at the firm's secured borrowing rate.
• C)If a firm purchases a piece of equipment,the expense is a capital expenditure.Therefore,the purchase price can be depreciated over time,generating a depreciation tax shield.
• D)If the equipment is leased and the lease is a non-tax lease,there is no capital expenditure,but the lease payments are an operating expense.

---

Definitions:

Interaction Effect

The effect on a dependent variable that arises from the combination of two or more independent variables, rather than from any single variable.

Dependent Variables

Variables in an experiment or study that are expected to change as a result of changes in the independent variable.

F-Ratio Statistic

The F-ratio statistic is utilized in statistical analysis, specifically ANOVA, to compare the variance between groups to the variance within groups, aiding in understanding if the means between two or more groups are significantly different.

Between-Group Variance

Between-group variance refers to the variation in data points that can be attributed to the differences in conditions or treatments across groups in an experiment.