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The Lease-Purchase Decision for Agricultural Assets

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  • Stephen A. Ford
  • Wesley N. Musser

Abstract

The decision to lease or purchase an asset is analyzed with methodology adapted from the corporate finance literature. The methodology allows determination of a break-even lease payment using a minimum of information. Symmetry between the lessee and lessor is also examined. Effects of changes in the discount rate, marginal tax rate, capital rationing, and other parameters on break-even lease payments are examined analytically and numerically. Analysis of differences in the parameters of the lessee and lessor identifies conditions under which markets for leasing arrangements will exist.

Suggested Citation

  • Stephen A. Ford & Wesley N. Musser, 1994. "The Lease-Purchase Decision for Agricultural Assets," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 76(2), pages 277-285.
    • Handle: RePEc:oup:ajagec:v:76:y:1994:i:2:p:277-285.
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    File URL: http://hdl.handle.net/10.2307/1243629
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    Cited by:

    1. Lescot, Jean-Marie & Rousset, Sylvain & Souville, Genevieve, 2011. "Assessing Investment in Precision Farming for Reducing Pesticide Use in French Viticulture," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114387, European Association of Agricultural Economists.

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