Question

explain at least 3 factors that pertain to your decision to either buy or lease your next vehicle.

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Answer 1

Following are the three factors which will pertain the decision of either buying or leasing the next vehicle as follows:

- Current Taxes and Transaction Costs: For the purpose of decision making, the person evaluating the purchase or lease option would consider the taxes and transactions costs on both of them and shall make decision accordingly. However, there could be some cases where both options consider same percentage of taxes and costs.

- Cost of capital: Cost of capital should also be considered, that is, it should be also be considered that whether the borrowing cost or opportunity cost of funds is higher and decision should be made accordingly.

- Personal or Business Purposes: The person should also consider that whether the asset being purchased is of personal or business nature, as if the asset would be for personal purpose then no benefit of depreciation shall be allowed on such asset and it will change the analytical approach of the person.

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