A form of asset acquisition whereby at the end of the lease period, the lessee has a right to purchase the asset for a set sum. The purchase price may be set in the terms of the lease during initial negotiations or it may be based on some fair market value formula. Many leases use a low dollar value purchase option such as $1 or $10. Another term for this type of lease is ‘Financing Lease’.
Fixed assets are normal in business operations. However, financing those assets is the critical issue. If you buy the asset outright, you tie up capital that can be used to expand operations or keep overall […]