True or false a. Lease payments are usually made at the start of each period. Thus the
Question:
True or false
a. Lease payments are usually made at the start of each period. Thus the first payment is usually made as soon as the lease contract is signed.
b. Some financial leases can provide off-balance-sheet financing.
c. The cost of capital for a financial lease is the interest rate the company would pay on a bank loan.
d. An equivalent loan’s principal plus after-tax interest payments exactly match the aftertax cash flows of the lease.
e. A financial lease should not be undertaken unless it provides more financing than the equivalent loan.
f. It makes sense for firms that pay no taxes to lease from firms that do.
g. Other things equal, the net tax advantage of leasing increases as nominal interest rates increase.
Cost Of CapitalCost of capital refers to the opportunity cost of making a specific investment . Cost of capital (COC) is the rate of return that a firm must earn on its project investments to maintain its market value and attract funds. COC is the required rate of...
Step by Step Answer:
Principles of Corporate Finance
ISBN: 978-0077404895
10th Edition
Authors: Richard A. Brealey, Stewart C. Myers, Franklin Allen