Which of the following is/are good reason(s) for leasing?I.Taxes may be cancelled by leasingII.Leasing may increase certain types of certainty that might increasethe value of the firm.II.buying the assetTransaction costs will cease to exist for a lease contract than forIV.Leasing facilitates the management of the firm's cash flows.V.Leasing provides 100 percent financing whereas loans require aninitial down payment.Select one:O a. IV onlyO b. I and IV onlyOc. I and II onlyO d. II onlyO e. I, II, and IV only

Name: Which of the following is/are good reason(s) for leasing?I.Taxes may
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Description: Which of the following is/are good reason(s) for leasing?I.Taxes may be cancelled by leasingII.Leasing may increase certain types of certainty that might increasethe value of the firm.II.buying the assetTransaction costs will cease to exist for a le

As far as concerned about the lease If we buy the asset from market certain kind of taxes can be…

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es may be cancelled by leasing sing may increase certain types of certainty that might increas the firm. saction costs will cease to exist for a lease contract than for sset sing facilitates the management of the firm's cash flows. sing provides 100 percent financing whereas loans require an

es may be cancelled by leasing sing may increase certain types of certainty that might increas the firm. saction costs will cease to exist for a lease contract than for sset sing facilitates the management of the firm's cash flows. sing provides 100 percent financing whereas loans require an

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter19: Lease And Intermediate-term Financing

Section: Chapter Questions

Problem 4QTD

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Which of the following is/are good reason(s) for leasing? I. Taxes may be cancelled by leasing II. Leasing may increase certain types of certainty that might increase the value of the firm. III. Transaction costs will cease to exist for a lease contract than for buying the asset IV. Leasing facilitates the management of the firm's cash flows. V. Leasing provides 100 percent financing whereas loans require an initial down payment. Select one: a. I and III only b. IV only c. III only d. I and IV only e. I, III, and IV only
Which of the following statements are true? I. Financial leasing can still provide off-balance sheet financing. II. The cost of capital for a financial lease is the interest rate the company would pay on a bank loan. III. An equivalent loan's principal plus after-tax interest payments exactly match the after-tax cash flows of the lease. IV. It makes sense for firms that pay no taxes to lease from firms that do. Select one: O a. II, III and IV only O b. I. Il and II. O. Il and IIl only O d. I, II, II, and IV
Which of the following is nota reason why some companies lease rather than buy? A. Leasing may allow you to borrow with little or no down payment. B. Leasing can improve the balance sheet by reducing long-term debt. C. Leasing can lower income taxes. D. Leasing transfers the title to the lessee at the beginning of the lease.
Which of the following typically represents an advantage of leasing over purchasing an asset with an installment note? a. Lease payments often are lower than installment payments.b. Leasing generally requires less cash upfront.c. Leasing typically offers greater flexibility and lower costs in disposing of an asset.d. All of the above are advantages of leasing.
Which is not an advantage of leasing from a lessee's viewpoint? A.The asset can be acquired without having to make a substantial down payment. B. Leased assets are never reported on the balance sheet. C. The risk of obsolescence may be reduced. D. A lease may provide 100% financing.
Which of the statements is most correct? Select one: a. Some years ago leasing was called "off balance sheet financing" because the leased asset and the corresponding lease obligation did not appear directly on the balance sheet. Today, though, the situation has changed materially because all types of lease must be capitalized and reported on the balance sheet, along with the value of the leased asset. O b. In a lease-versus-purchase analysis, cash flows should generally be discounted at the WACC. O . Each of the statements is true. O d. Each of the statements is false.
Q: Why might a new business be unable to get trade credit ? Q: Write down the Advantages and disadvantages of lease financing.
s) Which of the following is NOT one of the benefits of leasing an asset from another company? ... O Protection against obsolescence O Complete financing O Lower interest rates than normal debt O Increased likelihood of sale
Identify the incorrect statement concerning lease finance. A. Companies that are short of finance can use leasing as a source of assets B. Lease payments attract tax relief C. Interest payments attract tax relief D. Finance leasing allows companies to avoid the problem of obsolescence in cases where assets are subject to rapid technological change E. Empirical research has shown that many companies use an incorrect method when evaluating lease finance
Leasing is preferred to buying if: a. Net Advantage to Leasing is negative b. Maximum Lease Payment acceptable to Lessee is higher than the Minimum Lease payment acceptable to the Lessor c. When the NPV of buy and lease for Lessor is positive d. When Net Advantage to Leasing is positive
Which of the following is an example of faithful representation? A Showing lease payments as a rental expense B Being prudent by recording the entire amount of a convertible loan as a liability C Creating a provision for staff relocation costs as part of a planned restructuring D Recording a sale and repurchase transaction with a bank as a loan rather than a sale
Identify the CORRECT statement regarding the effect of lease on return on capital employed. Select one: O a. A company is able to improve its return on capital employed (ROCE) by entering into a finance lease for leasing non-current assets rather than borrowing to cover the purchase price of the assets. O b. A company is able to improve its return on capital employed (ROCE) by leasing non-current assets rather than borrowing to cover the purchase price of the assets. O c. A company is unable to improve its return on capital employed (ROCE) by leasing non-current assets rather than borrowing to cover the purchase price of the assets.