Asked by Daija Talley on Jul 03, 2024
Verified
In theory,we may regard the lease alternative as a commitment to finance the asset with what level of debt?
A) 0%
B) 25%
C) 50%
D) 100%
Lease Alternative
This term could refer to the option of leasing as opposed to purchasing an asset, often evaluated to determine the most cost-effective method of acquiring the asset.
Commitment To Finance
A lender's promise to provide funds under specified conditions to a borrower for a particular transaction.
- Understand the financial implications of leasing and compare them with alternative financing approaches.
Verified Answer
ZK
Zybrea KnightJul 04, 2024
Final Answer :
D
Explanation :
The lease alternative involves obtaining the use of an asset in exchange for a series of payments over time. Essentially, the lessor is financing the asset and the lessee is paying for the use of it. This can be regarded as a commitment to finance the asset with 100% debt, as the lessee is not putting any equity towards the purchase. Therefore, the answer is D) 100%.
Learning Objectives
- Understand the financial implications of leasing and compare them with alternative financing approaches.
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