Lease Vs. Loan : Evidence from Bangladesh
Finance comprises mainly three decisions, namely investment decisions, financing decisions, and dividend decisions. Every decision is significant to maximize shareholders’ value. Among these three decisions, financing decisions determine the proportion of debt and equity capital in the capital structure. The importance of financing decisions is enormous in the business world. A firm cannot reach its ultimate goal of wealth maximization if it undertakes a wrong financial decision. Thus, this paper examines the comparative cost of two sources of financing, namely lease and loan to determine the best sources at different tax rates and interest rates. It is a case-based analysis where six lease contacts are examined. Data collection is the most troublesome step in this research. The prevailing interest rate, loan amount, and conditions of the loan collected from the lessee are based on high confidentiality. After analyzing six cases the research finds that the present value of the cash outflow of the lease is less than that of the loan at different interest rates and tax rates in Bangladesh. The study also reveals that tax, cost of capital, duration, the present value of cash flow differences, and an additional payment of leases and loans significantly impact the present value of cash outflow of leases and loans. Moreover, lease financing has some other benefits compared to loans. Thus firms should give more attention to lease financing as a source of financing
Year of publication: |
[2023]
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Authors: | Chowdhury, Md Masud |
Publisher: |
[S.l.] : SSRN |
Subject: | Bangladesch | Bangladesh | Leasing | Kreditgeschäft | Bank lending |
Description of contents: | Abstract [papers.ssrn.com] |
Saved in:
Extent: | 1 Online-Ressource |
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Type of publication: | Book / Working Paper |
Language: | English |
Notes: | In: Journal of Economics, Finance and Management Studies, 06(6):2441-2448. June 2023 10.47191/jefms/v6-i6-03, Impact Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments June 6, 2023 erstellt Volltext nicht verfügbar |
Source: | ECONIS - Online Catalogue of the ZBW |
Persistent link: https://www.econbiz.de/10014362164
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