Financial Decision Making

Question 1

Type of Capital

Answer 1

• Equity

- Debt

Question 2

origin of Capital

Answer 2

• External financing

- Internal financing

Question 3

Leasing

Answer 3

Is a special type of debt financing because no cash is directly provided

Question 4

Leasing types

Answer 4

1. Direct leasing

2. Indirect leasing

Question 5

Leasing Contracts

Answer 5

Operate Leasing Contracts
 - no fixed leasing term
 - baut sides can withdraw
Finance Leasing Contracts
 - Fixed lease term
- no withdraw
- insured by lessee

Question 6

Purchasing vs. Leasing

Answer 6

• leasing rates are deductible from the taxable income
• leasing rate is shorter than the useful life
• instead of paying once it is payed over the time of use
• sum of leasing rates is higher than the purchasing rate
• the lessee potentially loses a cash discount

Question 7

Credit Purchase vs. Leasing

Answer 7

leasing installments represent operating expenses

Less demands to the creditworthiness