If a lease analysis shows exactly the same present value as an equivalent loan, the lessee should:
A)Choose to lease or buy based on other criteria
B)Lease, since there are more tax shelters
C)Buy, because the salvage might be bigger than estimated
D)Neither lease nor buy, since the asset choice is clearly wrong

Question

Quizplus · Accepted Answer

If the present value of the lease and loan are the same, the decision should be based on other criteria such as cash flow, financing terms, and future business needs. Choosing to lease or buy should be based on which option better aligns with the company's goals and objectives, rather than just the present value of the two options.

If a Lease Analysis Shows Exactly the Same Present Value