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

Yan yan corp has a 5000 par value bond outstanding with a

Yan Yan Corp. has a $5,000 par value bond outstanding with a coupon rate of 5.8 percent paid semiannually and 19 years to maturity. The yield to maturity of the bond is 6.3 percent. What is the dollar price of the bond? ...

During the great depression of the 1930s nominal interest

During the Great Depression of the 1930s, nominal interest rates were close to zero. Explain how real interest rates could be very high even though nominal interest rates were very low. (Hint: Prices fell during parts of ...

What does it mean that managers should maximize shareholder

What does it mean that managers should maximize shareholder wealth "subject to ethical constraints"? What are the ethical considerations that might impact decisions that result in cash flow and price effects that are les ...

A company is planning to open 100 new outlets that are

A company is planning to open 100 new outlets that are expected to generate, in total, $15 million in free cash flows per year, with a growth rate of 3% in perpetuity. If the company's WACC is 10%, what is the NPV of thi ...

Home equity lines max and claudia chadwick have a home with

Home equity lines. Max and claudia chadwick have a home with an appraised value of $180,000 and a mortgage balance of only $90,000. Given that an S&L is willing to lend money at a loan to value ratio of 75 percent, how b ...

Walmart npv analysisusing the publicly traded fortune 500

Walmart NPV Analysis Using the publicly traded Fortune 500 Company that you picked earlier in the course answer the following questions in 2-3 pages: • What types of long term investments would you recommend that they ma ...

1 you purchase a condo in new albany ohio for 250000 make

1. You purchase a condo in New Albany, Ohio for $250,000, make a down payment of $20,000, and finance the balance over 20 years with monthly payments and APR of 6.65% (compounded monthly), how much interest will you pay ...

Xyz company paid a dividend of 437 in the past 12 months

XYZ company paid a dividend of $4.37 in the past 12 months, and it has a growth rate of 6.5 percent. The stock currently sells for $175. Calculate the required rate of return. Do not use a financial calculator or an onli ...

Discuss fundamental strategies that can be employed to

Discuss fundamental strategies that can be employed to improve productivity in manufacturing operations technology?

You have an investment with 10 semi-annual cash flows of

You have an investment with 10 semi-annual cash flows of $1000. The first payment is 6 months from today. If the EAR is 11%, what is the present value of this investment?

  • 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

A cola-dispensing machine is set to dispense 9 ounces of

A cola-dispensing machine is set to dispense 9 ounces of cola per cup, with a standard deviation of 1.0 ounce. The manuf

What is marketingbullwhat is marketing think back to your

What is Marketing? • "What is marketing"? Think back to your impressions before you started this class versus how you

Question -your client david smith runs a small it

QUESTION - Your client, David Smith runs a small IT consulting business specialising in computer software and techno

Inspection of a random sample of 22 aircraft showed that 15

Inspection of a random sample of 22 aircraft showed that 15 needed repairs to fix a wiring problem that might compromise

Effective hrmquestionhow can an effective hrm system help

Effective HRM Question How can an effective HRM system help facilitate the achievement of an organization's strate