The cost of a 7 year lease is $150,000 per year and matches the exact cost of a loan to finance the purchase of equipment. Ceteris paribus, and given a usable life of 7 years with no salvage value, what is the advantage of a lease given a discount rate of 7% and no taxes?

Question

Quizplus · Accepted Answer

Since the lease cost matches the loan cost and there are no tax implications or salvage value, the net present value of both options is the same, resulting in no financial advantage.

The Cost of a 7 Year Lease Is $150,000 Per