Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Basic Finance Expert

problem1: Heavy use of off-balance sheet lease financing will tend to

[A] Affect a firm’s cash flows but not its degree of risk.

[B] Make a firm appear more risky than it actually is because its stated debt ratio will appear higher.

[C] Make a firm appear less risky than it actually is because its stated debt ratio will appear lower.

[D] Have no effect on either cash flows or risk because the cash flows are already reflected in the income statement.

problem2: Financial Accounting Standards Board (FASB) Statement #13 needs that for an unqualified audit report, financial [or capital] leases must be included in the balance sheet by reporting the

[A] Value of the leased asset as a fixed asset.

[B] Present value of future lease pay­ments as an asset.

[C] Present value of future lease pay­ments as a liability.

[D] Both A & B above.

[E] Both A & C above.

problem3:  Determine which of the following statements is most correct?

[A] The fixed charges associated with a lease can be as high as, but never greater than, the fixed payments associated with a loan.

[B] Capital, or financial, leases generally provide for maintenance service on the part of the lessor & can be refinanced at the discretion of the lessee.

[C] Firms which use “off balance sheet” financing, such as leasing, will show lower debt ratios once the effects of their leases are reflected in their financial statements.

[D] Capitalizing a lease means that the firm issues equity capital in proportion to its current capital structure, in an amount sufficient to support the lease payment obligation.

[E] A key difference between a capital lease & an operating lease is that with a capital lease, the total lease payments on the asset are roughly equal to the full price of the asset plus a return on the investment in the asset.

problem4: Operating leases normally have terms that include

[A] Cancellation clauses

[B] All of the above

[C] Maintenance of the equipment

[D] Only partial amortization

[E] Only answers A & C above

problem5: The lease analysis should compare the cost of leasing to the;

[A] After-tax cost of debt to measure the effect of leasing on the cost of equity

[B] Average cost of all fixed charges

[C] Cost of owning using debt

[D] Cost of owning using equity

[E] Cost of owning using the weighted average cost of capital for the firm

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M920012

Have any Question? 


Related Questions in Basic Finance

Figure 942 is one depth-first presentation of the ow graph

Figure 9.42 is one depth-first presentation of the ow graph of Fig. 9.38. How many other depth-first presentations of this ow graph are there? Remember, order of children matters in distinguishing depth-first presentatio ...

Beverages is negotiating a lease on a new piece of

Beverages is negotiating a lease on a new piece of equipment that would cost $100,000 if purchased. The equipment falls into the MACRS 3-year class, and it would be used for 3 years and then sold, because the firm plans ...

What is meant by break even drivers identify two important

What is meant by break even drivers? Identify two important drivers affecting the amount of revenues needed for ventures to break even Explain

1 why are scientists skeptical of post hoc explanations2

1. Why are scientists skeptical of post hoc explanations? 2. Why are operational definitions important in research?

As a financial advisor for the spain development co you

As a financial advisor for the Spain Development Co., you have been given the construction and marketing studies for the proposed Timbercreek office project. Several potential sites have been selected, but a final decisi ...

1 why do a firms stockholders hold a valuable default

1. Why do a firm's stockholders hold a valuable "default option"? How could this option induce stockholders to employ high levels of financial leverage? 2. All else equal, which firm would face a greater level of financi ...

Assignmenti the capital asset pricing model1write down the

Assignment I. The Capital Asset Pricing Model 1. Write down the formula for the Capital Asset Pricing Model (CAPM) and explain every variable in the model. 2. The betas for each of the assets are given in the table below ...

1 how many conditions are there in the simplest possible

1. How many conditions are there in the simplest possible experiment? 2. Describe how participants are assigned to conditions in randomized groups, matched-subjects, and repeated measures experimental designs. 3. What ar ...

1 what is meant by loan servicing2 identify the principal

1. What is meant by loan servicing? 2. Identify the principal sources of mortgage company income. 3. How does the Farm Credit System structure the various agencies that handle oversight of the farm mortgage lending funct ...

Assume that european call and put options exist on a stock

Assume that European call and put options exist on a stock. That stock, however, is the target of a takeover in which an acquiring firm offers a fixed price for the stock. The takeover is almost certain to occur shortly ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro

Describe what you learned about the impact of economic

Describe what you learned about the impact of economic, social, and demographic trends affecting the US labor environmen