Which of the following statements correctly describes how leasing companies' debt-dominated capital structure impact their cost of borrowing?
A) The portion of debt does not affect the cost of capital
B) Large portion of debt reduced the cost of capital
C) More information is needed to describe the impact on the cost of capital
D) Large portion of debt increases the cost of capital

Question

Quizplus · Accepted Answer

Leasing companies often have a large portion of debt in their capital structure, which can reduce the cost of capital due to the tax shield provided by interest payments.

Which of the Following Statements Correctly Describes How Leasing Companies