Multi-Scenario Decision Matrix (Tax Rate vs. Debt Rate)
Green: Lease PreferredBlue: Buy Preferred
Advanced Concepts Knowledge Base
Post-Tax Cost of Debt
Interest on debt is a tax-deductible expense. Therefore, the effective cost to the company is lower than the nominal rate. This is used as the discounting rate in Lease vs. Buy decisions because leasing is a debt-substitute.
Block of Assets (WDV)
As per Indian IT Act Section 32, depreciation is not calculated on individual assets but on the Written Down Value of the "Block." Our tool simulates this block-level reduction accurately over the project life.
Break-Even Lease Rental (BELR)
This is the "Upper Ceiling." If the lessor quotes a rental higher than the BELR, the management must always opt to buy. It is the rental where the Net Advantage to Leasing (NAL) is zero.
Capital Rationing Aspect
Even if "Buy" has a lower NPC, a company facing capital rationing (limited funds) may choose to "Lease" to preserve its liquidity for other high-NPV projects.
