Residual Value and the Value/Risk Trade-off in Lease-Versus-Buy Descisons



Product Details

   
Entities with limited appetite for residual value risk may choose
to lease assets because of the risk transfer benefit, even when
value economics favor the buy option, provided the value impact
of leasing is not too negative. This article provides a framework
for measuring risk transfer and making the value/risk trade-off in
this situation, including for leases with renewal options, by means
of a value to risk ratio.

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