Essay - Analyzing Lease vs. Buy Decisions Analyzing Lease vs Buy Decisions...

Analyzing Lease vs. Buy Decisions

***** ***** Vs ***** Decisions

In a comp*****ny's plan for acquiring valuable equipments and assets vital to its operation, there is always a question raised by the management and *****p executives, that is, whe*****r to lease or buy. This imp*****tant question is a common dilemm***** among financial managers of a company. Moreover, it is often a delicate task ***** analyze the pros ***** cons of buying or leasing depending on a given situation. The most common approach in resolving issues in ***** acquisition of vital ***** and properties for a ***** is by means of carefully calculat*****g the risks in both options. A ***** manager ***** a comp*****ny must put into consideration different factors that must be addressed cautiously in taking both options. *****mong the aspects that are given much emphasis: ***** economic life of an asset, the rate ***** it's obsolesce and most importantly the impact of the acquisition on the company's balance sheet ***** cash flow.

In the simulation "Analyzing Lease ***** Buy *****," arises ***** scenarios depicting usual *****s being undertaken by company management, top executives and financial advisers. The study on the company, Bonnesante Research, provides both *****, to lease or buy certain ***** ***** its use in the company's operations. ***** primary objective of this simulation is ***** determine which among the two options would be applicable and ***** effective in ***** ***** circumstances.

Being a start up company and also due to the conservative financial st*****ing ***** Bonnesante Research, ***** ***** is keeping a close watch over its cash flows ***** minimizing unnecessary expenditures and f*****mulating calculated measures in order to deter ***** prevent cash flow problems.

In the ***** scenario, ***** initial requirement ***** considered by Bonnesante is the acqu*****ition of a mainframe computer. This ***** equipment would be *****ful for the company's objective ***** heighten its research for the first six months of its trial ***** and support the requirement ***** ***** Food ***** Drug Administration. To acquire the equipment, Bonnesante must determine whether to purchase the computer mainframe outright or use ***** mainframe under an operating lease agreement. Based on the decisi*****s made in the simulation, the company opted ***** lease the mainframe f***** 18 months. The decision to lease was employed in consideration o***** ***** rapid obsolesce of computer equipments and comparatively to advance high-end computer workstations which is functioning at par with mainframes. Purchasing it was not adv*****able. Since Bonnesante is still not a profitable *****, the depreciation of such equipments shall affect the present cash flow situation due ***** ***** un-applicability of taxes if the mainframe is to be purchased. Operating ***** ***** a good option for equipments ***** high rates of **********. This decision only acknowledge the advise of Keith Kendall, managing director ***** HP Financial Services, about buying and leasing IT equipments stating *****,

If it's an appreciating *****, something that gains value over time, then you invest cash in it. If it's an asset that loses value over time, *****