Which of the Following Statements Is FALSE

question 39

Multiple Choice

Which of the following statements is FALSE?

• A)We can compare leasing to buying the asset using equivalent leverage by discounting the incremental cash flows of leasing versus buying using the after-tax borrowing rate.
• B)A non-tax lease is attractive if it offers a better interest rate than would be available with a loan.
• C)Evaluating a true tax lease is much more straightforward than evaluating a non-tax lease.
• D)To determine whether a non-tax lease offers a better rate,we discount the lease payments at the firm's pre-tax borrowing rate and compare it to the purchase price of the asset.

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Definitions:

Economies Of Scale

Cost advantages that enterprises obtain due to their scale of operation, resulting in decreased costs per unit.

Technological Advance

Improvements in technology, leading to more efficient production processes, new product features, or entirely new products.

Economic Growth

An increase in the production of goods and services in an economy over a period of time, typically measured by GDP.

The United States

A country in North America comprising 50 states, characterized by a federal form of government and known for its economic and military power.