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Equipment Leasing vs. Equipment Financing.

Equipment Leasing vs. Equipment Financing.

Read the article cited below that summarizes equipment leasing and equipment financing.

https://www.inc.com/jared-hecht/equipment-leasing-vs-equipment-financing-what-you-need-to-know.html (Links to an external site.)

Data for the Decision

Equipment Cost = $120,000
Estimated annual Maintenance cost = $2200
Annual Cost savings from the new equipment = $4400
Purchase information:

Loan rate from the bank = 9.0%
Annual Maintenance Cost to be paid by the company
Lease information:

Five-year annual lease Payment = $25,500
Option to purchase equipment after 5 years at $40,000
Annual Maintenance Cost would be done by the lease and is covered with the lease payment

Using this information and an analysis of the information above what is your recommendation to the President of the JW Company (an upscale, pre-made, dinner time food packages)? 

Should the equipment they need be purchased with a loan or leased?

 

Equipment Leasing vs. Equipment Financing.

 

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