Lease Vs Purchase : Lease Versus Purchase Equipment

Global Financial Corporation (GF) a subsidiary of Global Equipment Company (GEC) is tasked with handling financing for those customers who wish to purchase GEC heavy equipment. Currently GF only processes 51% of the leases within the “10 days or less” time frame, with some loans taking up above 41 days. Ms. Rodriguez, the Vice President of GF has been directed to decrease loan processing time to 10 days or less with the current staff she has. The current structure of the analysis and evaluation stage does not maximize staff time effectively and as a consequence creates a bottleneck in the process. We recommend switching to a case manager structure. lLan applications can be processed and

Disadvantages of leasing include the zero accumulation of equity. Also if the lease period is too long, you could be locked into an agreement for space that no longer serves your needs. Additionally, the property manager or landlord can limit expansion and modification (Spohn, 2010). These issues would need to addressed with the landlord prior to avoid any issues post-signing.

The lease agreement comes out to be the better option when the lease term is long at about 60 months than a purchase agreement for the same length of time. This is because in the lease agreement, the company is able to break even at about 51 months as compared to the purchase agreement which needs the company to make the payments till the end of the term in order to breakeven. In addition to this,

To determine which of the lease options above is best for your client the benefits such as profit and appropriate write-offs should be evaluated. The sale-type lease would not address the needs of your client because the proposed transaction by your client

But on the other side, if you are renting, unless you damage the property, you don’t have to pay for fixing repairs.

While working on a consulting engagement, a supervisor in the team has given an assignment. The client is a regional trucking company. A new customer has approached the client with an opportunity that would require 120 trailers—20 more than the trucking company currently owns. The client is uncertain how long the relationship with the customer may last, but the deal has the potential for significant growth. The supervisor has asked a research to be conducted on leases and lease structure issues on the Financial Accounting Standards Board (FASB) website, in particular the current practice and thought related to direct financing, sales type, and operating leases. This paper is a memo addressed to the supervisor that summarizes

Right to repair and deduct. Tenants have the right to occupy a habitable premises. If the landlord fails to make basic repairs to maintain the habitability of the property, the tenant may repair damages and deduct the amount from the rent owed to the landlord. Any lease agreement that prohibits this right is unenforceable.

The owners who do offer the “rent-to-own” option are not only allowing the tenants time to come to a more stable financial state, but are making money themselves. If the

Although many variations of lease financing are available, potential lessees should be familiar with two general types of leases: the full payout lease and the fair market value (FMV) lease. The choice of lease is based upon the lessees’ long-term plans for the asset involved. A full payout lease is one in which the present value of the payment stream equals the acquisition cost of the asset. Options at the end of the lease typically include return, renewal, or purchase often for $1. The lessee is able to deploy and utilize the equipment, while the periodic payments of the full payout lease ease the financial burden of making a large IT acquisition. This option is a good choice when future ownership is desired, the dollar value of the equipment is substantial, the expected productive life of the assets is longer than five years, and the flexibility of spreading out payments would

| * Offers flexibility for people to decide where they want to live * Landlords are responsible for most of the maintenance of the property

Lease agreements are usually part of the negotiations; sellers may sublease or prefer a new lease to be removed from liability.

Lease is defined as an agreement where lessors promised to convey the right to use the asset for an agreed period of time to lessees in return for a sum of payment as in AASB 117 paragraph 4. Leases can be classified as either finance or operating lease based on the economic substance of the agreement.

In today’s world, customers often face a dilemma about whether to buy or lease. Lease is an agreement in which one party gains a long term rental agreement, and the other party receives a form of secured long term debt. On the other hand, buying involves transfer of ownership from seller to buyer. Buying or leasing decision depends mostly on customer’s preference. There are many factors to consider before taking a buying or leasing decision.

In order to determine if leasing the hardware and software for 24 months would be beneficial, we first calculated the NPV and EAC for two different scenarios.  The first scenario consists of computing the NPV and EAC of

What are the key takeaways to remember when determining future lease versus buy decisions of this magnitude?