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Does leasing release the firm from bad investment? Explain.
If the basic purpose of the investment is defeated then an investment may turn out to be bad investment. For example, if a company purchases a machine and that machine become obsolete in terms of the rapid technological development; in that case this investment will turn out to be a bad one. In such circumstances leasing release the firm from bad investment as the risk of obsolescence is transferred to the lessor which means the owner of the asset and the funds of the firm may be used for more profitable purposes.
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