Benefit of leasing over buying

	The question every entrepreneur  have to come to terms with is. That though the prospect of avoiding interest and financing charges by paying cash is pretty attractive to some clients. But cash isn't free. It's a limited asset, and there may be better ways to use it than tying it up in a depreciating asset. Keeping cash on hand makes it easier to seize a business opportunity before your competitor can arrange financing, or to weather a downturn that cripples your competition. By spending cash on assets, the client can also lose the tax advantages and residual-value benefits that leasing provides. (The residual value is the amount that the lessor can expect to recover by selling the asset after the lease ends.) Ultimately, using cash to invest in their business provides returns that are far higher than the interest rate of a lease.
	Even is the thinking is that owning is cheaper. The truth remains, the cost of cash is usually higher than the debt rate. Cash is a scarce asset on the balance sheet, and a reasonable position is to use the Weighted Average Cost of Capital as the discount factor. Even if the entrepreneur believes today that the equipment will be kept for a long time, a lot of things can change. A 36-month fair market value (FMV) lease preserves substantial future flexibility at little or no additional cost.