Purchase Equipment vs Leasing

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Faraway Township Assessor Office

April 8, 2011

Carol Calhoun
Faraway Township Assessor
55662 North Haven Dr
Faraway, IL 60003

Dear Mrs. Carol Calhoun,
Here is the report and research you asked me to complete. It compares and contrast purchasing computer equipment from leasing the equipment. I also included my recommendations on what and how our Township would benefit from. If you have any other questions or concerns with my findings or research, please feel free to ask. Look forward to your decision.

Thank you,

Jessica Rogers
Deputy Assessor

Faraway Township Assessor Office

Computer Equipment; Lease or Buy

Prepared for
Carol Calhoun
Faraway Township Assessor

Prepared by
Jessica Rogers
Deputy Assessor
Faraway, Illinois

April 10, 2011


Businesses today are faced with many questions and ideas to allow them to run efficiently as possible. Expenses can make or break a company. One major factor in this is their equipment costs and whether or not to purchase or lease. There is not a clear cut choice as this report will present the advantages as well as the disadvantages on both analogies to help determine if purchasing or leasing computer equipment is more beneficial to our company, Faraway Township. Leasing arrangements are complicated and often confusing. Often representatives from equipment manufacturers are not fully versed in the details of their own agreement. (Outfitters)



Discussion 2
Leasing Equipment2
Purchasing Equipment3

Picture of computer equipment retrieved from
http://www.guardian-computer.com/repair/sun/sun-microsystems-computer-service-repair.html ii


As a company, we are at a cross road to make a decision on how we expect to obtain new computer equipment for our office. We currently have seven work stations that need to be replaced. One option, which is the most obvious, is to purchase the equipment we need from our local realtor. Our second option, not as clear is to lease the equipment from a local vendor that provides this option to companies. Leasing arrangements usually run something like this: You pay a small down payment up front and agree to an ongoing monthly payment. In turn, the manufacturer or third party leasing company pays for the equipment. At the end of the lease’s term, you must surrender the equipment. (Outfitting) Typically, leasing can be more beneficial for established companies, although it can occasionally be right for a startup. When considering leasing, we should start with the following questions: • How will this equipment be used? • Will we need regular upgrades? • What is the best use of our working capital? • Are we planning expansion or acquisitions? • Does it make more sense to preserve my bank relationships for equity lines of credit or growth financing, rather than for a loan to acquire equipment? (PRO)

Leasing Equipment
Looking into both options given to our company there are advantages and disadvantages to both. Our company currently is not planning an expansion any time soon. Leasing will allow us to improve our cash flow and also allows our company to afford more (All Business). It allows us to “rent” the equipment at a monthly fee, so that we don’t have to expend all of our cash available, allowing the company to keep cash on hand and able to use it as needed. With technology changing rapidly, leasing makes it easier and more cost effective to keep up the ever changing technology of today (All Business). Being able to ‘trade’ or ‘update’ the systems with minimal fees will allow us to have the most current and up to date technology. There are also a few disadvantages to leasing equipment as well that should be known. With leasing, you are not able...
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