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Leasing vs. Buying Computers for an Engineering Firm

Leasing vs. Buying Computers for an Engineering Firm. Project Presentation Team 1 EGR 403 – Section 02 6-7:50pm T/Th. Our Roles. Team 1 Members Jacob Hagman – Organizer Justino Rojas – Techie Micheal Jones – Techie John AmirAbbassi – Summarizer. Our Project.

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Leasing vs. Buying Computers for an Engineering Firm

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  1. Leasing vs. BuyingComputers for an Engineering Firm Project Presentation Team 1 EGR 403 – Section 02 6-7:50pm T/Th

  2. Our Roles Team 1 Members • Jacob Hagman – Organizer • Justino Rojas – Techie • Micheal Jones – Techie • John AmirAbbassi – Summarizer

  3. Our Project • To analyze the options of leasing vs. purchasing a set of 50 workstations for an engineering firm • High End Machines • Estimating 3 Year Term • Manufacturers: Dell vs. IBM

  4. Evaluating our Options • Advantages of Leasing • You can get much more equipment at once, since you don't have to pay for all of it in a lump sum. • You can spread payments over time on a regular and predictable basis. • You can afford to keep all of your hardware at much the same level. • Equipment warranties also often last the same period as a lease.

  5. Evaluating our Options • Disadvantages of Leasing • You don't own the equipment so you must be more careful what you do with it. • You won't want to spend money to customize, expand, or modify the equipment unless you want to either remove the modifications or lose the money when the equipment is returned.

  6. Evaluating our Options • Advantages of Purchasing • You own the equipment, so you can do with it what you like, including upgrading it or throwing it away. • You may be able to resell it while it has some residual value

  7. Evaluating our Options • Disadvantages of Purchasing • Depreciation & Salvage Value • Computers purchased may lead to in-equivalent workstations. Leading to uneven employee productivity and concerns with morale.

  8. Evaluating our Options • Disadvantages of Purchasing continued… • Support concerns • Becomes hard to maintain a standard “machine image” with different hardware configurations. • Technicians must be able to maintain a variety of operating systems. • As machines age, some parts become impossible or expensive to find.

  9. Analysis • Monthly Payments are not an accurate means of economic analysis • Annual worth method proved to be most appropriate • Two percent fixed loan compared with lease to buy options

  10. Analysis • Cash flow diagrams observed • 2% fixed loan vs lease to buy options • Annual Worth Analysis done on both scenarios

  11. Conclusions

  12. Sensitivity Analysis • Other Fixed Loan options • Increase Annual Benefit to $240,000 • No Salvage Value

  13. Web Resources • Bankrate – www.bankrate.com • Covers small business, real estate, mortgage, insurance, and credit information. Provides Finance calculators and investment advice.

  14. Web Resources • MSN Money – moneycentral.msn.com • Provides financial information on loans, stocks, leasing, and financial investing. Provides great variety of information pooled from multiple sources. Can forward to mobile devices.

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