Assume a lessor and a lessee can borrow at the same rate and also pay taxes at the same rate. Given this, then a lease between these parties:
A) will be a loss to both parties.
B) benefits both parties by the same amount.
C) is a zero-sum game.
D) will be disallowed by the IRS.
E) will always benefit the lessor at the expense of the lessee.

Question

Quizplus · Accepted Answer

When the lessor and the lessee can borrow at the same rate and pay taxes at the same rate, a lease between them becomes a zero-sum game as any benefit gained by one party is offset by an equal loss to the other party. Therefore, option C is the correct answer.

Assume a Lessor and a Lessee Can Borrow at the Same