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.

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Definitions:

Cultural Values

represent the collectively held beliefs and norms that guide behavior and preferences within a society or group.

Society's Morals

The prevailing beliefs, principles, and norms about what is right or wrong that guide behavior within a society.

Established Practices

Procedures or methods that are widely accepted and used because of their proven effectiveness over time.

Management Positions

Job roles that involve overseeing and guiding employees or departments to achieve the organization's goals and objectives.