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Corporate Buy vs. Lease Analysis: Workstation Equipment Decision for Client | Presentation 2004

This presentation by Team Four on February 10, 2004, discusses the dilemma faced by an engineering consulting company tasked with replacing 25 PCs for a 3D graphics design client. The team considers the option of buying or leasing workstation equipment, focusing on Dell Precision Dimension 8300 models. The benefits of leasing, such as smaller capital expenditure, obsolescence protection, flexibility, tax advantages, and improved balance sheet, are detailed, alongside the costs associated with leasing. Resources include dell.com for equipment details and a textbook for economic analysis. Discover the various acquisition options and financial implications in this comprehensive analysis.

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Corporate Buy vs. Lease Analysis: Workstation Equipment Decision for Client | Presentation 2004

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  1. Corporate Buy vs. Lease Analysis A Presentation by Team Four: Junni Kim Trung Nguy Robert Quesada II Felipe Vargas Yiu-Ming Yuen February 10, 2004

  2. Our Scenario • The Client: 3D graphics design company • The Consultant: Engineering consulting company needs to replace 25 PC’s for its client • Consultant considers buying or leasing the workstation equipment • 3D graphics application recommends P4, 2.5GHz processor, 1GB SDRAM, 120GB HD, 256MB video ram, and DVD-RW capability

  3. Resources • www.dell.com for workstation equipment • Class textbook: “Essentials of Engineering Economic Analysis”, 2nd ed. • Search engines to find reputable internet consulting firms for more examples and ideas of methodology

  4. Equipment Chosen • Dell Precision Dimension 8300 • P-4 at 3.2GHz • 1GB SDRAM • 120GB HD • 256MB video ram • DVD-RW • Total Cost of equipment: $2,282/PC x 25 PC’s = $37,425

  5. Our Options to Acquire this Equipment • Fair Market Value Lease • 10% Purchase Option Lease • $1 Buy-Out Purchase Plan Lease • Finance Purchase

  6. Cost of Each Option

  7. Benefits of Leasing • Smaller Capital Expenditure • Protection Against Obsolesce • Flexibility • Tax Advantages • Improved Balance Sheet

  8. Costs of Leasing • Finance Charges • No resale value realized • Technology upgrade options are expensive

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