When deciding whether or not to lease an asset, the _____________ should be compared against the ______________, and if the first is lower then the company should proceed with the lease.
A)Internal rate of return/cost of debt
B)WACC/cost of debt
C)Cost of debt/internal rate of return
D)Return on equity/WACC

Question

Quizplus · Accepted Answer

When deciding whether to lease an asset, the internal rate of return (IRR) should be compared against the cost of debt. If the IRR is lower than the cost of debt, it indicates that the lease is a more cost-effective option than financing the asset through debt.

When Deciding Whether or Not to Lease an Asset, the _____________