Leasing types- Compare two types of leases, and describe the advantages and disadvantages of each. Which type of lease would produce the lowest risk?
Leasing types-The two types of leases are operating leases and capital leases.
Operating leases:
Advantages:
- Lower monthly payments compared to capital leases
- No liability on the balance sheet as the leased assets are not considered owned
- Flexibility to return the leased assets at the end of the lease term or to upgrade to new equipment
- Lower risk as the firm is not responsible for the residual value of the leased asset
Disadvantages:
- Higher total lease cost compared to capital leases as the asset is…..
Leasing types-The two types of leases are operating leases and capital leases.
Operating leases:
Advantages:
- Lower monthly payments compared to capital leases
- No liability on the balance sheet as the leased assets are not considered owned
- Flexibility to return the leased assets at the end of the lease term or to upgrade to new equipment
- Lower risk as the firm is not responsible for the residual value of the leased asset
Disadvantages:
- Higher total lease cost compared to capital leases as the asset is…..
Leasing types-The two types of leases are operating leases and capital leases.
Operating leases:
Advantages:
- Lower monthly payments compared to capital leases
- No liability on the balance sheet as the leased assets are not considered owned
- Flexibility to return the leased assets at the end of the lease term or to upgrade to new equipment
- Lower risk as the firm is not responsible for the residual value of the leased asset
Disadvantages:
- Higher total lease cost compared to capital leases as the asset is…..
Leasing types-The two types of leases are operating leases and capital leases.
Operating leases:
Advantages:
- Lower monthly payments compared to capital leases
- No liability on the balance sheet as the leased assets are not considered owned
- Flexibility to return the leased assets at the end of the lease term or to upgrade to new equipment
- Lower risk as the firm is not responsible for the residual value of the leased asset
Disadvantages:
- Higher total lease cost compared to capital leases as the asset is…..
