Compared to an identical company that uses an operating lease, a company that uses a ﬁnance lease will most likely produce a reported return on equity (ROE) that
A) starts lower but rises during the life of the lease
B) starts higher but declines during the life of the lease
C) is lower but does not change over the lease period.
D) starts higher and remains so during the life of the lease.

Question

Compared to an identical company that uses an operating lease, a company that uses a &#64257;nance lease will most likely produce a reported return on equity (ROE) that
A) starts lower but rises during the life of the lease
B) starts higher but declines during the life of the lease
C) is lower but does not change over the lease period.
D) starts higher and remains so during the life of the lease.

Quizplus · Accepted Answer

The Answer of Compared to an identical company that uses an operating lease, a company that uses a &#64257;nance lease will most likely produce a reported return on equity (ROE) that
A) starts lower but rises during the life of the lease
B) starts higher but declines during the life of the lease
C) is lower but does not change over the lease period.
D) starts higher and remains so during the life of the lease.

Compared to an Identical Company That Uses an Operating Lease