Which of the Following Statements Is False

question 6

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:

Goal-setting

The action of establishing achievable and measurable objectives to guide personal or professional development.

Self-fulfilling Prophecy

A self-fulfilling prophecy is a belief or expectation that influences behavior in a way that causes the belief to become true.

Directive Leadership

A leadership style characterized by giving direct orders and instructions, with a clear line of authority and control.

External Locus of Control

The belief that one's outcomes in life are determined by external forces or events outside their control, as opposed to being the result of their own actions (internal locus of control).