The Lease-Purchase Decision for Agricultural Assets

Stephen A. Ford and Wesley Musser

American Journal of Agricultural Economics, 1994, vol. 76, issue 2, 277-285

Abstract: The decision to lease or purchase an asset is analyzed with methodology adapted from the corporate finance literature. The methodology allows determination of a break-even lease payment using a minimum of information. Symmetry between the lessee and lessor is also examined. Effects of changes in the discount rate, marginal tax rate, capital rationing, and other parameters on break-even lease payments are examined analytically and numerically. Analysis of differences in the parameters of the lessee and lessor identifies conditions under which markets for leasing arrangements will exist.

Date: 1994
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Persistent link: https://EconPapers.repec.org/RePEc:oup:ajagec:v:76:y:1994:i:2:p:277-285.

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