6. More on lease analysis You may come across several situations where you may need to decide whether to lease or to buy assets, such as equipment, a car, a house, and so forth. You may have several opportunities where you may need to evaluate leases from either a lessee's or a lessor's perspective. Thus, it is important to understand certain issues and benefits related to leases and the fine print used in lease contracts. Based on your understanding of leases, which of the following statements are true? Statements True False A lease contract, in general, gives the lessee the option to buy the leased property at a fair market value. Assets that are likely to have very high expected market values at expiration will tend to have lower costs of leasing. Lessees in general are in relatively higher tax brackets, whereas lessors tend to be in lower tax brackets. 0 0 0 0 o oo A firm with leases instead of long-term loans is likely to appear stronger in a superficial credit analysis. A short-term lease with high annual payments will increase reported expenses and decrease the reported profits. This would help a firm save the alternative minimum tax (AMT). o