# Decide whether to lease or buy an asset

A lease-versus-buy comparison on after-tax present value, plus the cash, accounting, and flexibility trade-offs.

- Topic: Finance & Accounting
- Framework: RTF
- Level: Standard
- Tags: Finance, Fill-in Template
- Source: https://www.thinkwithprompt.com/prompts/decide-whether-to-lease-or-buy-an-asset

## Prompt

```text
Help me decide whether to lease or buy an asset.

**Asset:** [WHAT, expected useful life]
**Purchase option:** [price, financing rate if borrowed, maintenance, residual value]
**Lease option:** [term, payments and timing, fees, maintenance included?, end-of-term options]
**Our discount rate / cost of debt:** [%]
**Tax rate and depreciation rules to apply:** [DETAILS - or "pre-tax only"]
**Other considerations:** [cash constraints, covenants, technology obsolescence risk, expected usage]

Steps:
1. Lay out after-tax cash flows for each option over the same period.
2. Calculate the present value of each and the difference.
3. Identify the break-even lease payment or residual value at which the decision flips.
4. Note how each option affects the balance sheet and reported EBITDA under the lease accounting standard I use [ASC 842 / IFRS 16], and any covenant effect.
5. Weigh qualitative factors: flexibility, upgrade path, maintenance risk, and cash preservation.

Return:
- A side-by-side cash flow table and PV summary.
- The break-even analysis.
- A short recommendation with the conditions under which it would change.

Treat tax and accounting treatment as general information to confirm with your accountant. Mark missing inputs [CONFIRM].
```

## What to fill in

- WHAT, expected useful life
- DETAILS - or "pre-tax only"
- ASC 842 / IFRS 16
- CONFIRM

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