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:

Phlegmatic

Referring to a temperament characterized by a calm, unemotional, and unexcitable nature.

Hippocrates

An ancient Greek physician often regarded as the father of medicine, known for his contributions to the understanding of disease and medicine.

Analytical Psychology

A branch of psychology founded by Carl Jung that emphasizes understanding the psyche through exploring the world of dreams, art, mythology, world religion, and philosophy.

Psychodynamic Theory

A psychological perspective that emphasizes unconscious processes and childhood experiences in shaping personality and behavior.