Comparing leasing versus purchasing
There are several factors to consider when deciding whether to lease or to purchase an equipment. To begin with, one ought to consider the tax advantages attracted by each method of acquiring the equipment.Leasing an equipment attracts better tax advantages than purchasing the equipment because leasing allows one to make deductions of the full payment made on the equipment. On the other hand, purchasing an equipment allows one to deduct the interest attracted by equipment in case the money to make the purchase was borrowed (Eliza,1995).
The full life of the equipment one needs to acquire should be used when deciding whether to lease the equipment or to purchase it. The length of time within which the equipment is to be used can be used in making this decision. If one needs the equipment to use for a short period of time then the leasing option is better. On the other hand, if the equipment is to be used over a long period of time then purchasing is the better option. The life of the equipment could refer to the physical life or the technological life. The physical life is the time when the equipment will last without wearing out. If it has a long physical life, purchasing it will have more benefits compared to leasing.
Another factor to be considered when deciding whether to lease or to purchase an equipment is the costs of the two methods. Depending on the situation, either method could be good as long as the terms and
