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What are the main perceived advantages of leasing capital assets as opposed to borrowing in order...

What are the main perceived advantages of leasing capital assets as opposed to borrowing in order to purchase them?

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Answer #1

What are the main perceived advantages of leasing capital assets as opposed to borrowing in order to purchase them?

  • There is less expense up-front with leasing due to easy, predictable payments. large lump sum to purchase is not required, making it easier to budget for the equipment over a longer period of time.
  • Leasing is 100% tax-deductible as an operational expense under the 179 IRS Tax Code.
  • leasing does not require maintenance. If something breaks due to normal wear and tear, the leasing company is in charge of fixing the equipment.
  • Leasing can lead to better use of capital
  • Leasing can lead to balanced cash outflow
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