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Compare and Contrast Lease Versus Purchase Options

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Compare and contrast lease versus purchase options, including advantage and disadvantages. How are debt financing and equity financing related to lease and purchase and please give a couple of examples for each? What is an alternative capital structure and its advantages and disadvantages? Which one is better? Please provide your reference. If it is available online, I would like to go back to it and read more about it. Also, I have gathered some information on the topics and I am challenged on examples and how to put them together so the paper will have a nice flow.

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The expert compares and contrasts the leases versus purchase options in the following solution.

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Sometimes companies must make the decision to lease or purchase an asset. The decision depends on the need of the asset and if it makes more sense to lease the asset or purchase based on a financial analysis. Therefore, a manager will be more focused on whether the use of the asset is really important or not (Ross, Westerfield, and Jordan, 1999). There are two types of leases in business: an operating lease or a financial lease. An operating lease, the company leases equipment for a short amount of time and is responsible for insurance, taxes, and any upkeep. An example of an operating lease would be if a company decides to lease a car. The lessee's payment for the lease of the car will also include insurance costs and taxes because otherwise, the lessor would not make much money off the lease because the short-term payments will not be enough to pay off the asset should anything go wrong with the car. The option on an operating lease is that the contract can be canceled after the time period has ended. ...

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  • Doctorate of Management in Organizational Leadership, University of Phoenix - Online
  • MBA, Webster Univeristy
  • Dual BS Degrees, University of South Carolina
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