Which of the Following Statements Is False

question 8

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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