40 - What are the key advantages of leasing as compared to...

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What are the key advantages of leasing as compared to borrowing to acquire an asset? What are the key disadvantages of leasing? One of the most important form of long term finance nowadays is Lease financing. In lease financing a company can rent an asset or acquire right to use an asset without buying it from the actual owner. It is a written agreement or deed between two entities or firms, one who owns the assets and the other one which wants to use the asset for rent. There are lots of advantages and disadvantages of lease finance. Advantages of Lease finance over purchase of asset are: Huge capital investment on asset can be eliminated buy lease purchasing of assets. Risk of depreciation and obsolescence doesn’t affect to the lessee. Leasing is quickest and easiest method of financing of capital. The periodic lease rents paid by the lessee are tax deductible expenditure. Leasing increase the borrowing power of the company as its debt equity ratio will be
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This note was uploaded on 10/15/2011 for the course FIN 550 taught by Professor Smith during the Spring '11 term at Berklee.

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40 - What are the key advantages of leasing as compared to...

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