Question

Leasing has become the primary method of external financing for U.S. companies. What are reasons for this shift? (Check all that apply.)

a) Tax Advantages
b) Lower Initial Costs
c) Flexibility
d) Ownership Benefits

Answer 1

The reasons for leasing becoming the primary financing method for U.S. companies include tax advantages, lower initial costs, flexibility, and ownership benefits.

Step-by-step explanation:

The reasons for leasing becoming the primary method of external financing for U.S. companies include:

1. Tax Advantages: Leasing allows companies to take advantage of tax benefits, such as deducting lease payments as business expenses.
2. Lower Initial Costs: Leasing often requires lower upfront costs compared to purchasing, as there is no need for a large capital investment.
3. Flexibility: Leasing provides companies with the flexibility to upgrade or change equipment as needed, without long-term commitments.
4. Ownership Benefits: Leasing allows companies to use assets without the burden of ownership responsibilities, such as maintenance or disposal.