Describe some economic factors that might provide an advantage to leasing.

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Describe some economic factors that might provide an advantage to leasing.

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Describe some economic factors that might provide an advantage to leasing.

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The following economic factors are proved advantageous forĀ  a lease transaction:

Dynamic environment: The market conditions are highly dynamic that is, changing rapidly. So, it will be beneficial to acquire an asset on lease rather than purchasing it. Therefore, the changing phase of market, demands and the taste of consumers and also the high competition with the other players in the market, makes leasing the asset an advantageous option.
Technological obsolescence: The economy is subject to the rapid technological changes and hence, the existing assets get obsolete more quickly as the new technology is introduced in the market. Therefore, acquiring an asset on lease is more profitable in the scenario of rapid technological advancements, rather than purchasing it.
Uncertainty: There are times when a firm might be uncertain about the demands of its products in the market. If the demand of the company's products falls or extinguishes, the investment made in buying the assets will go to waste which will eventually decrease the value of the firm. Therefore, leasing the assets becomes more beneficial to such companies as the assets can be returned and the lease agreement can be terminated whenever required.

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