I will recommend adding leasing as source of finance that Eco World can procure. Leasing or renting out assets is a valid source of finance. The most common example is to rent out office space for other company. Most companies just simply sign a lease with the landlord instead of bundling cash in the purchase of the building or in investing in improvements to the leased property. For example, a company are growing rapidly and need to add storage and distribution space to their products. The company negotiated with the owner of Eco World to make improvements and then increased the rent proportionally to cover the additional costs. This arrangement allows companies to use cash internally and to improve the improvements of the buildings during the lease term. Leases are the most common assets with extended service lives of buildings and capital equipment. Structural leasing of capital equipment is also …show more content…
I think finance leasing is the best for Eco World company. Financial leasing or capital lease is closest to the hire purchase option. If Eco World choose finance lease as their source of finance, they can gets lease rental by leasing an asset during the period of lease which is an assured and regular income. Besides that, in case of finance lease, Eco World transfers all the risk and rewards incidental to ownership to the lessee without the transfer of ownership of asset hence the owner­ship lies with Eco World. Furthermore, as ownership lies with the Eco World, tax benefit is enjoyed by the lessor by way of depreciation in respect of leased asset. Moreover, the business of leasing is highly profitable since the rate of return based on lease rental, is much higher than the interest payable on financing the asset. Last but not least, in case of finance lease, the lessor can recover the total investment through lease rentals (Yourarticlelibrary,