More on lease analysis

4. More on lease analysis Aa Aa You may come across several situations where you may need to decide whether to lease or to buy assets, such as equipment, a car, a house, and so forth. You may have several opportunities where you may need to evaluate leases from either a lessee's or a lessor's perspective. Thus, it is important to understand certain issues and benefits related to leases and the fine print used in lease contracts. Based on your understanding of leases, which of the following statements are true? True False O Statements A lease contract, in general, gives the lessee the option to buy the leased property at a fair market value. Assets that are likely to have very high expected market values at expiration will tend to have lower costs of leasing. If the tax laws changed to allow companies to depreciate their equipment over a shorter period of time, the lessor would get larger tax credits and faster depreciation write-offs. Companies often use lease financing to get around loan covenants. If you lease a car for five years, your lease payments will end after five years; but, if you finance a car through an auto loan for five years, your loan payments will continue indefinitely. OO