The purpose of this assignment is to explain core concepts related to lease vs. purchase and...

Question

The purpose of this assignment is to explain core concepts related to lease vs. purchase and tactical financial decisions.

Read the Chapter 19 Mini Case on pages XXXXXXXXXXin Financial Management: Theory and Practice. Using complete sentences and academic vocabulary, please answer questions a through f.

APA format is not required, but solid academic writing is expected.

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Robert · Accepted Answer

1
(a)  
(1) Lewis Securities is acting as the lessee while Consolidated Leasing is acting as the lessor.
(2) The five main lease types are operating, financial, leaseback, combination and synthetic. 
The key characteristics of these leases are highlighted below.
 Operating lease – In this there is no ownership transfer of the asset as the lease period is 
typically only a fraction of the asset overall life. Further, there are cancellation clauses 
and essentially this is called a service lease. 
 Financial lease – In this, the lease period is greater than 75% of the useful life of the asset 
and essentially there is a transfer of ownership with clauses to buy the asset after the end 
of the lease period. This is also called as capital lease. 
 Leaseback lease – This is used when a firm tends to experience financial difficulties and 
thus sells its assets to another entity and leases the same from the buyer of the asset. 
Since, the lesser in the process gets the cash while gradual lease payments have to be 
made, thus,

The purpose of this assignment is to explain core concepts related to lease vs. purchase and tactical financial decisions. Read the Chapter 19 Mini Case on pages XXXXXXXXXXin Financial Management:...

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