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How does leasing affect fixed capital requirement?

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Question

How does leasing affect fixed capital requirement?

Options

  • It increases need for outright purchase, raising fixed capital

  • It increases fixed capital by adding new lines of business

  • It reduces need for outright purchase, lowering fixed capital

  • It creates higher replacement need through fast obsolescence

MCQ
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Solution

Leasing is a Financing Alternative that reduces the need for outright purchase. This lowers fixed capital requirement.

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