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Evolution of a Lease Solution
Author(s) -
BURROWS G. H.
Publication year - 1988
Publication title -
abacus
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.632
H-Index - 45
eISSN - 1467-6281
pISSN - 0001-3072
DOI - 10.1111/j.1467-6281.1988.tb00208.x
Subject(s) - lease , economics , cash , work (physics) , process (computing) , microeconomics , finance , computer science , mechanical engineering , engineering , operating system
The lease solution most frequently advocated in the literature, that in which the after‐tax cash flows of leasing and borrowing are discounted by the after‐tax borrowing rate, is invariably associated with Myers, Dill and Bautista (MDB; 1976). This article, while accepting the basic assumptions underlying this solution, attempts to identify its origin and the process by which it evolved. The finding is that Bierman and Smidt (1966) pioneered this approach which has its antecedents in the works of Gant (1959) and McEachron (1959). Post‐MDB developments in this solution are analysed and a critique is offered of an alternative evaluation approach advocated in MDB's influential work.