You are about to purchase a new delivery truck which is expected to last about 4 years. Which of the following methods should you use to finance it? A short-term (less than 5 years) loan from a bank, issuance of a 20 year bond, or issuance of common stock. Justify your choice with a short explanation.
Answers:
a truck is a depreciating asset, meaning its value will eventually go to zero. The short-term lease is the best option by far. You would be paying wayy after it's useful life with a bond and common stock is a reflection of assets of the company, not liabilities.
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