Question

In the lease-versus-purchase decision, one of the advantages is:

A the tax shield provided by the lease payment.

B the lower interest rate on the lease than on a loan to buy the asset.

C the ability to use the after-tax cost of debt rather than the weighted average cost of capital in the decision. t

D he ability to savings from purchasing the equipment.

Strip bonds

A. provide no annual interest payments.

B. have highly stable prices even with changing interest rates.

C. provide an investor with tax-free income until maturity.

D. two of the other answers are correc

Answer 1

1.

Option D is correct.

The ability to savings from purchasing the equipment.

Explanation:

If one leases rather than purchasing, than one saves in the form of cost that is associated with purchasing the asset, which is generally higher.

2.

Option A is correct.

provide no annual interest payments.

Explanation:

Strip Bonds are bonds in which coupon payments and principal are separated and sold separately.

As coupon payments and principal are separated, it doesn't make any annual payment.