What question did this study set out to answer?

The aim is to respond to criticisms regarding the evaluation of lease versus buy alternatives and the role of implicit factors.

Implicit Factors in the Evaluation of Lease vs Buy Alternatives: A Reply.

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The article addresses critiques of lease versus buy evaluations, clarifying implicit factors' roles and implications.

The aim is to respond to criticisms regarding the evaluation of lease versus buy alternatives and the role of implicit factors.
Addressed criticisms of previous conclusions regarding lease vs buy evaluations.
Discussed the impact of depreciation patterns and implicit interest rates on decision-making.
Explained the relevance of discounting cash flows at the cost-of-capital.
Confirmed that if depreciation life exceeds the lease period, leasing may be more advantageous.
Clarified that tax shield effects should be evaluated based on cost-of-capital instead of merely the borrowing rate.

Lanny G. Chasteen (1974) studied this question.

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