a) Expensive cars are often leased because: Group of answer choices 1) Because foreign luxury cars are often cheaper to operate than less expensive cars. 2) Because luxury cars tend to have more air bags resulting in lower mortality rates which result in lower insurance rates. 3) Because luxury care cost more and banks are willing to give better deals on these type of cars. 4) Because luxury cars tend to maintain their residual value.

5)Because foreign cars are made better resulting in cheaper insurance rates.

b) Which of the following is a good reason to lease? Group of answer choices 1) Leasing does not affect the firms ability to borrow to make other investments. 2)The financing charges are usually lower with a lease. 3)Leasing can allow a lessee to minimize technological obsolescence. 4) Leasing always preserves debt capacity. 5) Often times you may be able to fool analysts by not having a high debt to equity ratio

c) Which of the following statements is not correct concerning the net advantage of leasing (NAL)? Group of answer choices The NAL can be positive even though the NPV for purchasing and the NPV of leasing can be negative. If the asset must be acquired and the NAL is positive, you should lease. If the acquisition of the asset had not been established, then even if the NAL is positive you may not want to lease. If the NAL is positive, then as a manager you should always lease. If the NAL is negative then you may still not want to buy the asset.