To Lease or to Buy?
Length: 1-3 Hours
Level: Intermediate (majors)
Author: Narayanaswamy, Canchepuram
The problem focuses on whether leasing or buying an asset is less expensive. The problem provides a setting in which students will be able to apply concepts such as discounting, NPV, capital budgeting, etc., learned earlier in a typical corporate finance course. The problem provides material that could make individual groups to propose different solutions based on the publicly available information they access. In spite of these differences, the problem has enough structure for coordinated classroom discussion to enable each group to learn from the analyses of other groups.