Leasing has long been recognized in business as a way of managing the high cost of capital as well as minimizing the infrastructure investments required to maintain equipment. Rather than making an up-front purchase, leasing enables assets to be acquired in areas where managing obsolescence is a high priority.
Leasing computer equipment is a good example of this business strategy. A three-year lease of microcomputers generally encompasses their productive life span, eliminating the cost of initial purchase and managing their obsolescence through the term of the lease. When the lease ends, the option may be renewed for new equipment or other alternatives may be sought to meet changing business requirements.