Jeff owns a new company that is considering either leasing or buying a $100,000 piece of equipment. The lease-buy analysis indicates that buying is better than leasing in Jeff's situation. What factors other than those considered in the lease-buy analysis might lead Jeff to lease rather than buy, in contradiction to the analysis results?

Student answers will vary. Answers might include some of these key points:
Leasing removes uncertainty.
Leasing increases the external financing resources available.
Leasing places fewer restrictions on a firm than does debt.
This is a newer firm that most likely needs to conserve cash until financial stability is established. Also, being a newer firm increases uncertainty in several areas. The more financial flexibility the firm can retain, the better the firm can respond to unexpected events. Thus, the firm might choose to lease until the firm is established and financially secure.