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Fundamentals of Corporate Finance, 4/c/e

Fundamentals of Corporate Finance, 4/e

Stephen A. Ross, Massachusetts Institute of Technology
Randolph W. Westerfield, University of Southern California
Bradford D. Jordan, University of Kentucky
Gordon S. Roberts, York University

Leasing

Learning Objectives

After studying this chapter in the textbook, you should be able to:

Distinguish between and give examples of operating leases and financial leases.

List the criteria that define a financial lease for accounting purposes.

List the circumstances that would cause the Canada Customs and Revenue Agency to disallow a lease.

Conduct a lease or buy analysis.

Explain the decision rule that takes into account the value of the net advantage to leasing (NAL).

Clearly explain the key point that differentiates the lease versus buy decision with and without the assumption of a continuing asset pool.

Explain why the lease contract is not a zero-sum game between the lessee and the lessor.

Outline the list of both good and bad reasons for leasing.

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