Questions from Financial Management

Q: Are lessees more likely to be in higher or lower income tax

Are lessees more likely to be in higher or lower income tax brackets than lessors?

Q: Commercial banks moved heavily into equipment leasing during the early 1970s,

Commercial banks moved heavily into equipment leasing during the early 1970s, acting as lessors. One major reason for this invasion of the leasing industry was to gain the benefits of accelerated depr...

Q: One advantage of leasing voiced in the past is that it kept

One advantage of leasing voiced in the past is that it kept liabilities off the balance sheet, thus making it possible for a firm to obtain more leverage than it otherwise could have. This raised the...

Q: Suppose there were no IRS restrictions on what constituted a valid lease

Suppose there were no IRS restrictions on what constituted a valid lease. Explain, in a manner a legislator might understand, why some restrictions should be imposed. Illustrate your answer with numbe...

Q: Suppose Congress enacted new tax law changes that would: (

Suppose Congress enacted new tax law changes that would: (1) permit equipment to be depreciated over a shorter period, (2) lower corporate tax rates, and (3) reinstate the investment tax credit. Di...

Q: In our Anderson Company example, we assumed that the lease could

In our Anderson Company example, we assumed that the lease could not be canceled. What effect would a cancellation clause have on the lessee’s analysis? On the lessor’s analysis?

Q: What is interest rate parity? How might the treasurer of a

What is interest rate parity? How might the treasurer of a multinational firm use the interest rate parity concept: (a) when deciding how to invest the firm’s surplus cash and (b) when deciding wher...

Q: Distinguish between the APV, FCFE, and corporate valuation models.

Distinguish between the APV, FCFE, and corporate valuation models.

Q: Define each of the following terms: a. Lessee;

Define each of the following terms: a. Lessee; lessor b. Operating lease; financial lease; sale-and-leaseback; combination lease; synthetic lease; SPE c. Off–balance sheet financing; capitalizing d. F...

Q: Paul Duncan, financial manager of EduSoft Inc., is facing a

Paul Duncan, financial manager of EduSoft Inc., is facing a dilemma. The firm was founded 5 years ago to provide educational software for the rapidly expanding primary and secondary school markets. Al...