A firm will be indifferent to leasing versus buying when the:
A) NPV from leasing is zero.
B) asset is fully depreciated.
C) IRR from leasing is zero.
D) asset can be purchased at the end of the lease.
E) firm's tax rate is zero.

Question

Quizplus · Accepted Answer

When the NPV from leasing is zero, it means that the present value of the lease payments is equal to the cost of buying the asset. The firm will be indifferent to leasing versus buying in this scenario.

A Firm Will Be Indifferent to Leasing Versus Buying When