RELATION BETWEEN LEASE FINANCE AND PURCHASE

This paper discusses the long-term financial lease contracts with lease evaluation. Here a comparatively simple and straightforward solution of neutralizing the risk of lease financing is explained. The lease is a contract between the owner and the user of assets for a certain period during which the second party uses an asset in exchange of making periodic rental payments to the first party without purchasing it. In the longterm lease contract the lessee (the user of assets) is generally given an option to buy or renew the lease. An attempt has been taken here to investigate the buy or lease decision of an asset of a competitive firm.