Lease vs. Borrow Problem after Tax Reform in Slovak Republic
Keywords:
financial lease, lease analysis, leasing decision, net advantage to leasing.Abstract
The paper deals with the problem of effectivenessevaluation of long-term property financing throughfinancial leasing, emphasizing the application of quantitativemethods within this area. The aim was to focus ondefining the financial flows relevant for the analysis, aswell as on the derivation of the basic model of the financialleasing effectiveness.The aim of the presented paper is to elaborate themethodology for evaluation of effectiveness of financialleasing under the conditions prevalent in the SlovakRepublic.The review of literature devoted to valuation ofleasing contracts indicates, that consensus in the fieldof suitable methodology for valuation of leasing investmentsdoes not exist.The authors above mentioned corresponded to taxmodification of financial lease before adoption of taxreform in Slovak Republic, when the lessor amortizedthe lease subject and transferred the benefits of leasemode of depreciation indirectly on lessee in the form oflease payment, representing for him the fully acceptabletax item. For conditions stated by regularization offinancial lease and practical use the formula needsfurther modification.
