FM Topic Explainer: Lease Vs Buy

In this video expert tutor Rashaad Hussain unpacks the topic of Lease Vs Buy
#acca #leasevsbuy #financialmanagement

[@vaishnavisurnam5719]

That was straight to the point and the explanation was crystal clear to grasp. Thank you Mr Rashaad!!

[@anime_kdrama_editz9630]

The topic was very easy to understand. Thanks to you!

[@SteveWillisACCA]

Very helpful!

[@renatasantos7369]

Great explanation. Thanks

[@DirterXaap]

Lovely ❤

[@sharmajidaladka]

Hello Sir, It is mentioned in the question that the company intendes to finance the new machine by means of a 4 year fixed interest loan. Shouldn't we take this into account when calculating the NPV for the Buying option? Also, should we consider the Tax savings on Interest expenditure on loan?

[@MinhNguyen-qz2sn]

Investment appraisal does not take interest payments into account, regardless the project is financed by equity or debt. This is one of the basic principles.

[@rhs_finscript]

There are several methods for resolving the Lease vs Buy decision, each varying according to the approach used in different courses. In the ACCA Financial Management approach, discounting the cash flows at the loan's interest rate integrates the interest's effect into the net present value (NPV).