Analysis of Financial Leases

The authors present an improved model for evaluating the lease versus borrow alternative. The basic advantages of this model are that the cost of leasing is insensitive to changes in the interest rate on borrowing, and all the costs are adjusted to make them risk equivalent.

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Bibliographic Details
Published inFinancial management Vol. 2; no. 1; pp. 74 - 87
Main Authors Roenfeldt, Rodney L., Osteryoung, Jerome S.
Format Journal Article
LanguageEnglish
Published Albany, N.Y Finman Corporation 01.04.1973
Financial Management Association International
Subjects
Borrowing
Cash
Corporate taxes
Costs
Debt financing
Decision making
Finance leases
Financing decisions
Interest rates
Investment decisions
Leases
Leasing
Loan payments
Net present value
Operating leases
Present value
Salvage value
Tax payments
Tax rates
Useful life
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Summary:The authors present an improved model for evaluating the lease versus borrow alternative. The basic advantages of this model are that the cost of leasing is insensitive to changes in the interest rate on borrowing, and all the costs are adjusted to make them risk equivalent.
ISSN:0046-3892
1755-053X
DOI:10.2307/3665103