When deciding whether or not to lease an asset,the ______ should be compared against the ______,and if the first is lower,then the company should proceed with the lease.
A) internal rate of return / after-tax cost of debt
B) wacc / after-tax cost of debt
C) after-tax cost of debt / internal rate of return
D) return on equity / wacc

Question

Quizplus · Accepted Answer

The internal rate of return (IRR) should be compared against the after-tax cost of debt. If the IRR is lower than the after-tax cost of debt, it indicates that the lease is a more cost-effective option for financing the asset.

When Deciding Whether or Not to Lease an Asset,the ______