A non-financial firm can long-term lease equipment to gain the use of the equipment as an...

Transcribed Image Text:

A non-financial firm can long-term lease equipment to gain the use of the equipment as an alternative to buying the equipment with the cost financed. In many Corporate Finance courses, the lease/buy decision is evaluated for the lessee. That is, the firm, individual, or government unit gaining use of the equipment rather than owning it. There are many sources, like the one listed below, the discuss leasing from the lessee's perspective. Let's look at leasing from the point of view of the Financial Institution (FI) providing the funding as lessor with the asset on its balance sheet. That is, the FI buys and owns the equipment (an asset on the balance sheet) and the non-financial lessee makes payments (typically monthly) to the FI as lessor for the use of that equipment. Discuss what are advantages, if any, of a financial intermediary, such as a finance company (or a bank or savings institution), leasing equipment as a lessor to a business customer as a lessee rather than financing the customer's purchase of the equipment with a loan collateralized by the equipment? That is, rather than recording a loan as an asset on the FI's Balance Sheet, the FI's Balance Sheet shows owned equipment for lease as an asset. Focus on the generic financial institution lessor rather than any differences there might be if the lessor were a Finance Company rather than a Commercial Bank or a Thrift. Remember, you're looking at this from the viewpoint of the lessor, not the lessee. After the due date for this Discussion Board there will be a section of the Week 7 Module with a summary and my commentary on this issue. Although improving, Supply Chain issues continue to be a problem in many areas. Further, increased costs are not always able to be fully passed on to end users without charges of "price gouging." One area this has happened is in motor vehicles. Car Buyers Shun Leases as Deals and Vehicles Dwindle.pdf As always, remember, while citations or quotes are required, the responses should be your own words and thoughts. Further, just because something is on the web, that doesn't make it automatically correct and without bias. Know the source of anything you find on the web. BTW, for this week especially, there is a lot of misinformation on leasing on the web. A non-financial firm can long-term lease equipment to gain the use of the equipment as an alternative to buying the equipment with the cost financed. In many Corporate Finance courses, the lease/buy decision is evaluated for the lessee. That is, the firm, individual, or government unit gaining use of the equipment rather than owning it. There are many sources, like the one listed below, the discuss leasing from the lessee's perspective. Let's look at leasing from the point of view of the Financial Institution (FI) providing the funding as lessor with the asset on its balance sheet. That is, the FI buys and owns the equipment (an asset on the balance sheet) and the non-financial lessee makes payments (typically monthly) to the FI as lessor for the use of that equipment. Discuss what are advantages, if any, of a financial intermediary, such as a finance company (or a bank or savings institution), leasing equipment as a lessor to a business customer as a lessee rather than financing the customer's purchase of the equipment with a loan collateralized by the equipment? That is, rather than recording a loan as an asset on the FI's Balance Sheet, the FI's Balance Sheet shows owned equipment for lease as an asset. Focus on the generic financial institution lessor rather than any differences there might be if the lessor were a Finance Company rather than a Commercial Bank or a Thrift. Remember, you're looking at this from the viewpoint of the lessor, not the lessee. After the due date for this Discussion Board there will be a section of the Week 7 Module with a summary and my commentary on this issue. Although improving, Supply Chain issues continue to be a problem in many areas. Further, increased costs are not always able to be fully passed on to end users without charges of "price gouging." One area this has happened is in motor vehicles. Car Buyers Shun Leases as Deals and Vehicles Dwindle.pdf As always, remember, while citations or quotes are required, the responses should be your own words and thoughts. Further, just because something is on the web, that doesn't make it automatically correct and without bias. Know the source of anything you find on the web. BTW, for this week especially, there is a lot of misinformation on leasing on the web.

Answer rating: 100% (QA)

Unlike one time profits from loans the financing company can get repetitiv... View the full answer