What are the benefits of leasing as outlined in the CLFP study materials?

• A. Leasing increases maintenance costs.
• B. Leasing guarantees a higher resale value.
• C. Leasing provides flexibility, preserves capital, and offers tax advantages.
• D. Leasing is always the cheapest option.

Answer: (C)

Leasing offers benefits that help a business manage asset needs without tying up large amounts of cash. The main advantages are flexibility, capital preservation, and tax advantages. Flexibility means you can tailor the lease term to fit the asset’s useful life and your budget, with options to upgrade, extend, or purchase at the end if it makes sense for you. Capital preservation comes from avoiding a big upfront outlay, which keeps cash available for other priorities and preserves your borrowing capacity. Tax advantages typically come from lease payments being deductible as a business expense, plus potential other tax benefits depending on the lease structure and jurisdiction. The other statements aren’t true general benefits: maintenance costs aren’t inherently reduced by leasing, resale value isn’t guaranteed, and leasing isn’t always the cheapest option—the total cost depends on the specific terms and usage.