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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Definitions:

Public Capital

Assets owned by the public sector or government, including infrastructure like roads, bridges, schools, and hospitals that are used for public services.

Income Redistribution

The transfer of income from certain individuals or groups to others through government policies like taxation and social benefits.

Government Securities

Financial instruments issued by a government to finance its expenditure, including bonds, bills, and notes.

U.S. Citizens

Individuals who either were born in the United States or have gone through the naturalization process to legally attain citizenship status in the United States.