Below is an analysis of buying 50 computers over three years versus two leasing options.  We decided that we were unwilling to pay the interest for leasing.
Steve

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Leasing vs. Outright Purchase Options

Look at a scenario where we want to buy 50 workstations currently valued at $840 each.

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Option 1        No leasing.  Just buy 16 or 17 computers each year for three years.
Equipment Cost $42,000.00       Rate Factor  0  Annual Pymt   $14,000.00        Total Pymt   $42,000.00 Interest Paid  0

Advantages      Least costly of three options.  At end of lease, some models will only be one or two years old, thus more modern than 1st year mode Disadvantages       Takes three years to meet goal.  Three different models of computers to maintain.

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Option 2        Lease 50 computers immediately with a 36 month payment plan and with a $1 buyout option at the end of three years.
Equipment Cost $42,000.00       Rate Factor 0.03331     Monthly Pymt  $1,399.02         Total Pymt $50,364.72   Interest Paid  $8,364.72

 Advantages     Hardware goal met immediately.  Only one model of computer to maintain.
 Disadvantages  Most costly of three options.  All computers will be three years old at end of lease.

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Option 3        Lease 50 computers immediately with 3 annual payments (due July 1 of each year) and with a $1 buyout option at the end of three years.
Equipment Cost  $42,000.00      Rate Factor 0.3775         Annual Pymt  $15,855.00      Total Pymt $47,565.00   Interest Paid  $5,565.00

Advantages      Hardware goal met immediately.  Only one model of computer to maintain.
Disadvantages   Costs more than option 1.  All computers will be three years old at end of lease.



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