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Comparing the cost of Lease or Buy?

 You are considering whether to buy or lease a machine for your heavy engineering       plant. How will the duration of the project  influence your decision? 

 

• If you buy, the cost is $,, and the one-time cost of procurement and integrating in your company is $1, • If you lease, you have to pay $, as down payment and $5, per month 

 

 

 

 

 

Answer: If you buy, cost is: $, + $1, = $, Assuming the lease is for M months, the cost is: $, + $5, x M 

 

The cost of  buy = cost of lease, if : $, = $, + $5, x M M =,/5, = four months 

 

 

So, if the duration of the project is less than four months, you should lease—otherwise, you should buy.

 

 

International trainer ENG . Hassan Shalaby

 

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Question ajoutée par hassan shalaby , اخصائي تسويق ومبيعات، ومدرب مهارات معتمد من جامعة نوتنجهام بالمملكة المتحدة وجامعة عين شمس بالقاهرة , Galal Al , Sharif _Trading
Date de publication: 2017/01/05

Thanks for the invitation. Useful Information.

Utilisateur supprimé
par Utilisateur supprimé

Thanks for inviting me. Simple calculation can be done, whether to buy or lease. Actually we need to do cost analysis benefits. Other points like , government rules and regulations, resale value, transfer costs, future use, maintenance costs, should be considered...

Abdul Rehman
par Abdul Rehman , Electrical Engineer , Tamdeed Projects

Thank you  for the invitation and sharing the information.

Maher Ahmad
par Maher Ahmad , Head of Planning and Training Division , MOH

Thank you for the invitation.

I agree with Mr. Asif.

Muhammad Farooq
par Muhammad Farooq , QA-QC MANAGER , AL Bawani contracting co.

Thanks for good information ----------------------

Utilisateur supprimé
par Utilisateur supprimé

Thanks for the invitation,i would go for lease if the our need not more then four months,

DR MD ANWAR HOSSAIN
par DR MD ANWAR HOSSAIN , Moderator , bayt.com

Thank you for your invitation & necessary information.

hisham abu dagga
par hisham abu dagga , Project Manager / مدير مشاريع , مؤسسة عبدالكريم العواض للمقاولات

 

Thank you for the invitation

 

Each greeting to everyone on the benefit and enrichment of informational

Utilisateur supprimé
par Utilisateur supprimé

The lease or buy decision may seem to be a simple straight forwards question which can be answered based on simple mathematical calculation.

However, it may not be that straight forward - the calculations may show it is better to buy than lease but you may still lease it because you may not the the liquidity and low borrowing power.

and in contrast if lease is mathematically correct you may still buy the machine not based on current project in hand but based on future project prospects and also with a back-up plan to lease it out after the project.

So the parameters of consideration are wider.

يوسف دمدوم
par يوسف دمدوم , مهندس و مسير , مقاولة اشغال البناء

Thanks for the valuable information and useful

 

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