Computer Leasing Assessment
November 30, 2012
The purpose of this report is to determine why we should lease computer equipment as opposed to purchasing computer equipment. Leasing computers can save this organization revenue by not having to have an on-site IT Department for any hardware or software issues that develop. Any technological advances that develop can be upgraded to stay current with technology. This report will also look at the total cost of ownership as compared to leasing computer equipment. Finally the financial burden of the issue of computer disposal will be addressed.
Table of Contents
Table of Contents3
Advantages and Disadvantages7Advantages 7
The administrator of Dylon Industries, James Nichols, requested that I, the Administrative Assistant, make a comparison as to whether leasing or owning our computer equipment would be beneficial to Dylon Industries. With the cost of doing manufacturing in this economy, it is important to offset increases of raw materials and logistics to manufacture our product. This report is being presented as a course of how leasing computers could save this organization revenue and enhance the productivity of its employee’s. The scope of this report will go into detail of how this can be implemented and the benefits of leasing computers, as opposed to owning computers. I have investigated through web search, written material, and prior employment, where leasing computer equipment has been implemented.
More and more companies are leasing computers. This allows companies to stay on top of technical advances as the industry for computers advance at a fast rate. “ Unlike cars, PC technology advances every six months to a year, so leasing makes it possible to stay on top of the latest and greatest” (Behr, 2002). This will allow the organization to better serve their customers and we receive the best productivity of our employees so that their creativity is to their greatest potential. "The practice of leasing equipment as a way to make the most efficient use of resources—particularly in times of tight credit—is found in a variety of industries," (Wynn 1991).
The most common lease option would be to go with a 36 month lease, at the end of the lease you could return the equipment or buy the equipment at a fair market value. “The fair market value lease, which is the lowest monthly payment, allows for either the return of equipment or a buyout at the current market value at the end of the lease.” (Behr, 2002).
A breakdown of comparison of purchasing as opposed to leasing for $20,000 in computer equipment cost per month based on a 36 month lease is shown in Table 1.
Table 1 Buy or Lease Monthly Cost Comparison
Price| $20,000.00| Price| $20,000.00|
Interest rate| 8.00%| Interest rate| 8.00%|
Down payment| $1,000.00| Down...