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A firm paid $8 million in lease payments in 2016 and expensed these lease payments in 2016 as an operating lease. If the firm had

  1. A firm paid $8 million in lease payments in 2016 and expensed these lease payments in 2016 as an operating lease. If the firm had instead elected to capitalize the lease, what effect would this decision have on their 2016 Net Income and Debt/Assets ratio?
    1. Net Income and Debt/Assets would both increase
    2. Net Income and Debt/Assets would both decrease
    3. Net Income would increase and Debt/Assets would decrease
    4. Net Income would decrease and Debt/Assets would increase
    5. From this information the impact on Net Income and Debt/Assets cannot be determined

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