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:

Sample Proportion

The fraction or percentage of observations from a particular category within a sample, used in statistics to make inferences about populations.

Sample Size

The number of observations or replicates included in a statistical sample.

Allowance Factor

A coefficient or multiplier that accounts for expected deviations from standard or nominal conditions, often used in design and engineering to ensure safety or compliance.

Standard Production

The established amount of output that is expected under normal operating conditions within a given time period.