AbstractThe decision to lease or purchase an asset is analyzed with methodology adapted from the corporate finance literature. The methodology allows determination of a break‐even lease payment using a minimum of information. Symmetry between the lessee and lessor is also examined. Effects of changes in the discount rate, marginal tax rate, capital rationing, and other parameters on break‐even lease payments are examined analytically and numerically. Analysis of differences in the parameters of the lessee and lessor identifies conditions under which markets for leasing arrangements will exist.