Question: If an asset is leased, the lessee: Multiple Choice Most likely has a tax rate that is higher than the tax rate of the lessor.

If an asset is leased, the lessee:

Multiple Choice

  • Most likely has a tax rate that is higher than the tax rate of the lessor.

  • Has an initial cash outflow equal to the cost of the equipment.

  • Receives a tax deduction equal to the lease payment.

  • Benefits from the depreciation tax shield, thereby paying less tax.

  • Receives a tax deduction equal to the annual depreciation.

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