Lease or Purchase Decisions Name/ID# Institution Introduction In order to determine which option is best for the organization in the provision of motor vehicles to use in its operations, it is important to compare the relevant costs for each option. The information in Table 1 in the Appendix indicates that purchasing the vehicles may be the best option…
The options available to the organization is to obtain a lease for 36 months with the option to purchase at the end of the lease period, purchasing the motor vehicles by taking out a loan that is repayable over a 36 month (3 year) period or one that is repayable over a 60 month (5 year) period. The 2013 Odyssey LX There are three alternatives available to the organization if it seeks to purchase a 2013 Odyssey LX as one of the vehicles to be used in carrying out the work of the organization. These vehicles will be mainly assessed based on whether to lease or buy and the repayment period to be chosen in the case of the decision to purchase. The difference in total fixed cost is not very different in the case of the 5 year purchase option and the lease option which are $29,110 and $29,548 respectively and this would make the lease option more attractive in present value terms. The 3 year purchase option is approximately $1,250 less than the 5 year purchase option but the time value of money would determine which the better option. However, other considerations when purchasing a vehicle are its fuel economy and the cost of repairs and maintenance. ...
If the total miles to be travelled are well within the 45,000 miles limited then this option may be the best when the present value of money is taken into consideration. Here, an appropriate cost of capital to be used in arriving at the present value of the expenditure over the period would become a further consideration. However, if the motor vehicle is to be purchased by the organization at the end of the lease period approximately half of the total costs to the company of $13,868 would be paid at the end of year 3 and so the present value would be much less than paying the amount over a three year period. Additionally, this option presents the organization with a further option at the end of the lease period to either buy the motor vehicle or lease a new motor vehicle. Therefore, if the organization believes that it is best to get a new vehicle for various reasons including a substantial fall in the value of the vehicle, it would not be saddled with the task of selling the vehicle. One of the drawbacks of this option is that the lessor may specify the type of insurance required and this may place additional and unnecessary burden on the organization. Option 2 – Purchase the Odyssey using a loan repayable over 3 years Purchasing the Odyssey using a loan repayable over 3 years appears to be the lowest cost option based on the information in Table 1. However, this may not be the case if the present value of the expenditure over the 3 year period is considered. As mentioned an appropriate cost of capital would have to be used in determining this. In this case the payments for the motor vehicle are spread evenly over the 3 year period. One advantage of this option is that there will be no further charges for any additional miles travelled over 45,000 as in the ...
Cite this document
(“First exam Assignment Example | Topics and Well Written Essays - 1250 words”, n.d.)
Retrieved from https://studentshare.net/finance-accounting/102968-first-exam
(First Exam Assignment Example | Topics and Well Written Essays - 1250 Words)
“First Exam Assignment Example | Topics and Well Written Essays - 1250 Words”, n.d. https://studentshare.net/finance-accounting/102968-first-exam.
Exam 1 is due Tuesday 9 October. Late exams may not be accepted. You are expected to submit your own work. This exam is "open-book". You may use your books, notes, and the conferences to answer the questions - research beyond these sources is not necessary to complete this exam.
Such include the bodily desires and wants such as the sexual and aggressive drives among others. Super ego is the other extreme that represents the personality virtues that arise from social interactions. These features arise from those that an individual interact with the most such as the immediate society constituting the parents and peers.
98). In order to make a decision on whether to lease or buy, the advantages of leasing or buying must be analyzed. In addition, the disadvantages of leasing and buying can be evaluated. For new companies, short-term leasing and purchase of cars can solve the problem because it will lead to increase in the company’s assets rather than liabilities (Parker, 2005, p.
It was launched in 2005 and has been one of the most resounding innovations in the world of technology (Tom). Lars Rasmussen a software developer from the University of Aarthus proposed the idea. It became a popular App in the market place and changed the lives of people world over.
Along their journey up, a member of the group comes down the mountain and dumps a hurt sadhu(Holyman) at their feet and states that he had done what he could to take care of him and head back to the mountain to continue with his journey. The
Example 2: An article written by Robert L. Maginnis, a policy analyst in the Cultural Studies Project at the Family Research Council, indicates my hypothesis had some truth to it. Maginnis states that “the erosion of values is traceable largely to changes
ming up together and trying to generate ideas through a session of discussion and every individual is free to express their ideas on the topic of discussion without any judgment. This though involves several techniques of brainstorming that makes the process effective in problem
For instance, an angry mom telling his son to stop watching too many cartoons and instead spend that time on a school subject that he finds difficult. The child would repeatedly tell mom that he hates that subject and does not want to study. Mom would simply get