Question

What are the advantages of leasing for long-term financing purposes?

1) Lower initial costs
2) Flexibility to upgrade equipment
3) Tax benefits
4) Preservation of capital

Answer 1

The advantages of leasing for long-term financing purposes include lower initial costs, flexibility to upgrade equipment, tax benefits, and preservation of capital.

Step-by-step explanation:

The advantages of leasing for long-term financing purposes include:

1. Lower initial costs: Leasing typically requires a smaller down payment compared to purchasing outright, which can make it more affordable to start a long-term financing agreement.
2. Flexibility to upgrade equipment: Leasing allows businesses to easily upgrade their equipment at the end of the lease term, ensuring access to the latest technology without the burden of selling or disposing of outdated equipment.
3. Tax benefits: Lease payments can often be deducted as an operating expense, reducing the tax burden on the business.
4. Preservation of capital: Leasing enables businesses to conserve capital for other critical needs, such as expanding operations, hiring employees, or investing in research and development.