Bradley Co. is expanding its operations and is in the process of selecting the method of financing this program. After some investigation, the company determines that it may (1) issue bonds and with the proceeds purchase the needed assets, or (2) lease the assets on a long-term basis. Without knowing the comparative costs involved, answer these questions: a.    What are the possible advantages of leasing the assets instead of owning them? b.    What are the possible disadvantages of leasing the assets instead of owning them? c.    How will the balance sheet be different if Bradley Co. leases the assets rather than purchasing them?

Question

Bradley Co. is expanding its operations and is in the process of selecting the method of financing this program. After some investigation, the company determines that it may (1) issue bonds and with the proceeds purchase the needed assets, or (2) lease the assets on a long-term basis. Without knowing the comparative costs involved, answer these questions:

a.    What are the possible advantages of leasing the assets instead of owning them?

b.    What are the possible disadvantages of leasing the assets instead of owning them?

c.    How will the balance sheet be different if Bradley Co. leases the assets rather than purchasing them?

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