What is the pure advantage for leasing?

Leasing advantage is a calculation that determines the advantage of renting an item over direct purchase. Although this concept may apply to individuals and businesses, its most common use are purchases of equipment or equipment carried out businesses. The net present value is a basic financial company to determine the net advantage for leasing versus a direct purchase. The net present value compares future cash flows from each option against the current outflow of cash must be rented or purchased an item.

To calculate the net current value, owners of businesses and managers, they will have to start estimating the future inflow of cash generated by a new item. In some cases, these influx may be the same as a rental or purchase. However, companies can gain higher quality in the lease than for purchase, as leasing can allow companies to get a better item for less money. To complete the first half of the formula, the owners of the businesses are compromisingKY using the return and investment formula and add the sum of these numbers.

The second half of the formula of the net current value to determine the net benefits of leasing is the calculation of all costs associated with leasing or buying an item. Costs will include the costs of items, turnover tax, transport or transport costs, installation fees and wages for employees who have set up an item, among other things. If you want to calculate the pure current value, subtract the total current outflow of cash from the total discounted inflow of cash. A net advantage for leasing will mean that the future influx of cash from the item will be higher than the net current calculation from the item purchase.

Companies rent equipment if they get a non -financial clean advantage for leasing. For example, equipment or application of business technologies often become very fast, which means that the company will need these UPGRA itemsdreamed or replaced. In addition, maintenance or other corrective measures may cost more money if the company purchases an item. On the basis of the lease contract, the supplier often corrects or corrects problems for their own costs because the item is still own.

Lease can also allow the company to either purchase an item at the end of the lease or replace it at low or without additional costs. This helps society to have an established strategy for the development of its operations through planned upgrades - another net advantage for leasing.