Capital lease incurs tax deductible interest expense

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Reference no: EM131558469

True or false:

1. A capital lease incurs tax deductible interest expense. An operating lease is not tax deductible.

2. The only form of financing considered 'free' are the accounts payable and accrued expenses balances.

3. The 'optimal' capital structure is the one under which the firm has roughly equal dollar amounts of equity financing and long-term debt financing.

4. Under a capital lease, the firm is deemed to have purchased the equipment being leased, and to have financed the purchase with interest-bearing debt.

5. All short-term debt is considered temporary financing.

Reference no: EM131558469

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