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This study applies lease versus buy analysis to real estate decision-making. The introduction highlights the critical importance of such trade-offs to corporations and the scarcity of real estate examples in the financial management literature. Qualitative and quantitative considerations in real estate lease v buy analysis are discussed and illustrated with reference to an actual case. The study demonstrates that the qualitative dimension usually makes the real estate lease v buy analysis more complex than, say, that of equipment or motor vehicles. Quantitative analysis differs from other disciplines in the content and format of the cash flow projections, but the choice of discount rate is equally difficult. The case example is unusual: leasing or buying a state-subsidised university hostel. Because the hostel operation was subsidised, the usual financial analysis was inconclusive. The matter was resolved by also modelling the cash flow of the opposing party, to determine what the client was giving up. An appendix provides basic real estate lease principles and terminology.
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