Chapter 26: Leases

Some of largest lessors are equipment manufacturers.
What is a lease?
Financial lease are a source of financing. Signing a financial lease contract is like borrowing money. Operating leases and Financial leases.
Why lease?

Tax shield can be used.
Standardization.
Avoid the alternative minimum tax.
Operating leases: Lease or Buy
Equivalent annual cost.

Buy if you can rent to yourself cheaper than you can get from an outsider.

Financial lease: LEASE or BORROW.