FIN 370 Week 3 DQ 3

FIN 370 Week 3 DQ 3 - the tenant to pay the landlord a...

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Discussion Question(s) #3 Please reply to this thread by or before Sunday, day 6 with your answers! What is a lease? Why would you choose to lease instead of buy a capital item? What steps would you follow to decide whether to lease or buy a computer system? What is a lease? A lease, sometimes also referred to as a rental agreement, is an agreement between a landlord and a tenant which gives the tenant the right to use and occupy rental property for a period of time. When a tenant turns over the right to use and occupy rental property to a subtenant, the agreement is sometimes referred to as a sublease. A lease can be an oral agreement, or it can be in writing. If the lease extends beyond one year, most states require that it be in writing. An oral lease has the disadvantage of future misunderstandings over terms of the agreement, and potential problems for enforcement of terms between the landlord and the tenant. At the end of the lease, use and possession of rental property must be returned to the landlord. In addition to other responsibilities, a lease requires
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Unformatted text preview: the tenant to pay the landlord a specified amount of money each month; this payment is called rent. Why would you choose to lease instead of buy a capital item? Leasing prevents paying out so much capital upfront. This can help a companys cash flow management, particularly a start-up or rapidly growing company. Therefore, instead, the cost of having the capital item becomes an operating expense. What steps would you follow to decide whether to lease or buy a computer system? If you really want to know whether to lease or buy for business or personal needs, then do the usual research. There are always plenty of website's that can provide all the facts, crunch all the various numbers, and make it worth your while to investigate. Avoid the rent-to-own dealers, of course, as the offer of no money down and no credit check is insufficient to overcome the price you pay down the road. With rent-to-own, it is always bigger than you expect....
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This note was uploaded on 02/21/2011 for the course FIN 370 taught by Professor Unknown during the Spring '08 term at University of Phoenix.

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