The lease decision is a financing decision for the lessee and an investment decision for the lessor.

True

False

The five main types of leasing are operating lease, financial lease, sale and lease back, combination lease, and authentic lease.

True

False

Capital leases must be shown directly on the lessee’s balance sheet. Operating leases must be disclosed in the footnotes of the balance sheet.

True

False

Leasing is a substitute for debt and it uses up a firm’s debt capacity. Assume a firm has a 40% debt and 60% equity target capital structure. If 60% of the firm’s assets are leased, remaining assets must be financed with equity?

True

False