Answered

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After a project has been accepted, the decision to lease or buy is determined by the present value of the lease's cash flows when discounted at the project's risk-adjusted cost of capital. Group of answer choices True False

Sagot :

anthougo

Answer:

True

Explanation:

The present value of the lease's periodic cash flows using the project's risk-adjusted cost of capital discount rate is determined and recorded as the Rights to Use Asset with a corresponding Lease Liability of the same amount, if the lease option is taken.  If the buy option is taken, the cost of purchase and installation is recorded as the asset's value with the corresponding credit to the Payable or Cash account.  The major difference is that  the lessee enjoys greater flexibility in abandoning the project with leased equipment than when equipment is bought and owned.

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