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:

Autonomy

The right or condition of self-government, or in personal decision-making, the capacity to make an informed, uncoerced decision.

Legal Issue

A matter or dispute that concerns law or legal principles and requires legal knowledge to resolve.

Societal Norms

Shared expectations and rules that guide behavior within a society.

Common Law

The traditional unwritten law of England, based on custom and usage, which began to develop over a thousand years before the founding of the United States. Today, almost all common law has been enacted into statutes with modern variations by all the states except Louisiana, which is still influenced by the Napoleonic Code. In some states, the principles of common law are so basic they are applied without reference to statute.