Lease or buy decision

Compare the present value of the relevant after-tax cash costs of the available financing routes, using the appropriate rate and the question's assumptions. For purchase, consider price, maintenance differences, tax allowances and eventual disposal proceeds. For leasing, consider rentals, their timing, any tax deductions and obligations retained by the lessee. A financing comparison commonly uses an after-tax borrowing rate where the relevant assumptions hold. Separate the prior decision about whether the asset is worth acquiring from how to finance it. Accounting recognition alone does not determine which route is cheaper.