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    This document discusses leasing, hire purchase, and venture capital. It defines a lease as a contractual arrangement where a lessee pays a lessor for use of an asset. Leasing allows a firm to obtain use of fixed assets by making tax deductible payments over time. The document outlines important lease terms like lessee, lessor, tenancy, term, and rent. It describes operating leases as short term cancellable agreements where the lessor maintains the asset, and financial leases as long term non-cancellable agreements. The financial evaluation of leasing is examined from the lessee and lessor points of view by calculating the present value of costs for both buying and leasing options.

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    lease

    Original Title

    Lease

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    This document discusses leasing, hire purchase, and venture capital. It defines a lease as a contractual arrangement where a lessee pays a lessor for use of an asset. Leasing allows a firm to obtain use of fixed assets by making tax deductible payments over time. The document outlines important lease terms like lessee, lessor, tenancy, term, and rent. It describes operating leases as short term cancellable agreements where the lessor maintains the asset, and financial leases as long term non-cancellable agreements. The financial evaluation of leasing is examined from the lessee and lessor points of view by calculating the present value of costs for both buying and leasing options.

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    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
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    4 views10 pages

    Leasing, Hire Purchase and Venture Capital: Submitted By: Submitted TO

    Uploaded by

    AahilButt
    This document discusses leasing, hire purchase, and venture capital. It defines a lease as a contractual arrangement where a lessee pays a lessor for use of an asset. Leasing allows a firm to obtain use of fixed assets by making tax deductible payments over time. The document outlines important lease terms like lessee, lessor, tenancy, term, and rent. It describes operating leases as short term cancellable agreements where the lessor maintains the asset, and financial leases as long term non-cancellable agreements. The financial evaluation of leasing is examined from the lessee and lessor points of view by calculating the present value of costs for both buying and leasing options.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
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    of 10

    LEASING, HIRE PURCHASE AND

    VENTURE CAPITAL

    SUBMITTED
    TO:
    Dr. SAMEER
    GUPTA

    SUBMITTED BY :
    BARSHA
    DEEPAK RANA
    DIVA SAMNOTRA
    GAUTAM KUMAR
    HARVINDER SINGH
    IBADAT SINGH
    SETHI

    Leasing

    Meaning of Lease and Leasing


    Aleaseisacontractualarrangementcallingfor
    thelessee(user)topaythelessor(owner)foruseof
    anasset
    Leasingisaprocessbywhichafirmcanobtainthe
    useofacertainfixedassetsforwhichitmustpaya
    seriesofcontractual,periodic,taxdeductible
    payments.

    Important Terms:
    Lesseeisthereceiveroftheservicesortheassets
    undertheleasecontract.
    Lessoristheowneroftheassets.
    Tenancyistherelationshipbetweenthetenantand
    thelandlord.
    Termisthefixedoranindefiniteperiodoftime
    involvedintheleasecontract.
    Rentistheconsiderationforthelease.

    Types of Lease:
    Operating lease: Shortterm,cancellablelease
    agreements.Thelessorisresponsibleforthemaintaince
    andinsuranceoftheasset.Example:Touristrentinga
    car,Hotelrooms,etc.
    Financial Lease: Longtermnoncancellablelease
    contract.Example:Plant,Machinery,Building,Ships
    andaircraft.
    Sale and Lease-back: Specialfinancialagreementin
    whichtheusermaysellanassetownedbyhimtothe
    lessorandleaseitbackfromhim.Example:shipping
    Industry.

    Financial evaluation of
    leasing

    Two ways of
    evaluating
    1. Lessees point
    of view

    2. Lessors point
    of view

    Lessees point of view:


    Lease or borrow decisions:
    Steps:
    Calculate present value of netcash flow of the buying optionNPV(B)
    Calculate present value of net
    cash flow of the leasing optionNPV(L)
    Decide whether to buy or lease
    the asset or reject the proposal .

    How to decide.
    If NPV(B) is positive and
    greater than NPV(L) then

    If NPV(L) is positive and greater


    than the NPV(B)
    then lease the asset.

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