Assume you have analyzed the lease-or-purchase issue for a company. The present value of the cost of leasing is lower than the present value of purchasing the asset. In this situation, what recommendation would you give the company?
A) You need more information to settle the issue
B) Lease the asset
C) It doesn't matter whether they lease or purchase - the operating costs are the same
D) Purchase the asset

Question

Quizplus · Accepted Answer

Based on the analysis that the present value of the cost of leasing is lower than the present value of purchasing the asset, it is recommended that the company lease the asset. This would result in lower costs over the long term compared to purchasing the asset outright.

Assume You Have Analyzed the Lease-Or-Purchase Issue for a Company