What are the key differences between leasing and borrowing? Are they perfect substitutes? Please explain carefully...

What are the key differences between leasing and borrowing? Are they perfect substitutes? Please explain carefully the last questions about substitutes. thanks

Expert Solution

The key differences between leasing and borrowing is :

In a lease contract, there is a lessor and a lessee, the lessor allows the lessee to use a particular asset for a given period of time in return fro a recurring payment. At the end of the lease term, the lessee has to return the asset to the lessor as the lessor does not own the asset or the lessee will have purchase the asset from the lessor. There are 2 types of leases finance lease and operating lease. In case of a lease, the lessor cannot impose bankruptcy on the lessee in case there is a default. The lease payments are fully tax deductible
In the case of borrowing, the borrower lends money at a particular rate of interest which either has to be made annually, quarterly or semi-annually and is fixed. If your company has good income, a strong cash position, and comfortable borrowing capacity, a bank loan would be a good choice. If the borrower fails to repay the loan, the bank can take over the assets secured with bank of the company borrowing. whereas in the case of a borrowing, the borrower enjoys tax benefits for only the interest portion of the loan.

No, they are not perfect substitutes.

jeff jeffy answered 1 year ago

Explain the key similarities and differences between the Perfect Price Discriminating Monopoly market and the Simple...

Explain the key similarities and differences between the Perfect Price Discriminating Monopoly market and the Simple Monopoly market for (a) the producer; (b) the consumer and (c) the Social Welfare of economy? Construct graphs supporting your conclusions.

Please explain the key differences between RRT* (RRT-star) and A* (A-star) algorithms.

Explain the differences between purchasing an asset and leasing an asset. What are some "good" reasons...

Explain the differences between purchasing an asset and leasing an asset. What are some "good" reasons for opting to lease rather than purchase an asset? What are typical incremental cash flows, and how do you determine the net advantage to leasing

What are two key differences between a monopoly and a perfectly competitive market? Explain.

a) explain the steps in mitosis b) what are the key differences between meiosis and mitosis...

a) explain the steps in mitosis b) what are the key differences between meiosis and mitosis c) If the protein actin was inhibited during cell division, what could be the impact?

What are the differences between Perfect Competition, CwDP, Oligopoly, and Monopoly?

In what way is leasing similar to borrowing to buy an asset?

What are the key differences in gametogenesis between females and males? What is the key step...

What are the key differences in gametogenesis between females and males? What is the key step in spermatogenesis that allows for unlimited sperm production? This step is not present in oogenesis and therefore only a finite number of eggs could be produced. (0-5pts) Guidelines: You must include in your answer how the processes are similar and how they differ. What would health implications have the finite number of eggs present to the female? What organs are responsible for each gametogenesis?...

4. What are the differences between Perfect Competition, CwDP, Oligopoly, and Monopoly?

Explain the differences between perfect competition and monopolistic competition. b. Explain the long run equilibrium for...

Explain the differences between perfect competition and monopolistic competition. b. Explain the long run equilibrium for a monopolistically competitive firm that is earning economic profits in the short run.( use diagram to support answer)

Question