Jane is asked to evaluate whether it would be better to lease an asset or to borrow money from the bank to buy the asset. The NPV from buying the asset is calculated to be $30,000. The NPV for the lease versus borrow to buy analysis is calculated to be $500. Which of the following statements best describe the lease versus buy decision for this investment? None of the other statements is correct. More than one of the other statements is correct. As the asset has positive NPV, Jane indifferent between leasing the asset or borrowing to buy it. O Jane should lease the asset because her company would be better off by $30,000 compared to borrowing to buy the asset. Jane should lease the asset as long as the NPV for the lease versus borrow to buy analysis is positive.

Jane is asked to evaluate whether it would be better to lease an asset or to borrow money from the bank to buy the asset. The NPV from buying the asset is calculated to be $30,000. The NPV for the lease versus borrow to buy analysis is calculated to be $500. Which of the following statements best describe the lease versus buy decision for this investment? None of the other statements is correct. More than one of the other statements is correct. As the asset has positive NPV, Jane indifferent between leasing the asset or borrowing to buy it. O Jane should lease the asset because her company would be better off by $30,000 compared to borrowing to buy the asset. Jane should lease the asset as long as the NPV for the lease versus borrow to buy analysis is positive.

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter19: Lease Financing

Section: Chapter Questions

Problem 5MC

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Concept explainers

Leasing

Leasing is a contractual arrangement in which someone (a lessee) pays the owner (or lessor) of a building, land, vehicle, or other asset for the use of that asset. The lease is the agreement between lessee and lessor.

Question

Jane is asked to evaluate whether it would be better to lease an asset or to borrow money from the
bank to buy the asset. The NPV from buying the asset is calculated to be $30,000. The NPV for the
lease versus borrow to buy analysis is calculated to be $500. Which of the following statements best
describe the lease versus buy decision for this investment?
None of the other statements is correct.
More than one of the other statements is correct.
O As the asset has positive NPV, Jane indifferent between leasing the asset or borrowing to buy it.
O Jane should lease the asset because her company would be better off by $30,000 compared to borrowing to
buy the asset.
O Jane should lease the asset as long as the NPV for the lease versus borrow to buy analysis is positive.

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