How is the amount of a lease payment determined

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Question: In a perfect capital market, how is the amount of a lease payment determined?

What are some of the potential benefits form leasing if the lessee plans to hold the asset for only a small part of its useful life?

Consider the following: retail chain is planning to enter the market in Michigan by opening 25-30 locations (the plan is to stay in the state permanently). This firm has two options: a) buy/build all these stores; b) rent existing facilities from commercial REIT. Which option would you recommend to this firm management? (alternatively, name factors/conditions when it might be optimal to lease the stores; when it might be optimal to own the properties.

Reference no: EM132753062

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