To Lease or Buy?

Paper Summary:

This paper discusses the various capital equipment and facility lease/purchase options for start-up businesses. The paper describes a target business that is an indoor tennis facility and needs all the requisite equipment necessary to start and operate it. The paper explains that the facilities themselves might better be purchases, while the equipment may be better leased. The paper mentions, however, that each business' financing methodology is unique.

From the Paper:

"The decision to lease equipment as opposed to buying it outright is a complex decision with benefits to both considerations. For the leasing option, newly formed enterprises such as an athletic facility that has a limited amount of capital or are constrained in access to capital sources, leasing is the better option. For companies that have no capital issues and that are purchasing equipment that has a long life span, buying the equipment is the best option because the returns on the investment cover a longer period."

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