To Buy or Lease?

Case Study # 96162

Accounting
Business > Accounting
Business > Management

To Buy or Lease?

This paper summarizes a simulation for analyzing lease vs. buy options.

1,393 words () | 3 sources | MLA | 2007 United States

Paper Summary:

The paper presents brief descriptions of various lease vs. buy scenarios along with recommended solutions, including reasons behind the decisions. The paper discusses how asset acquisitions require comparing and contrasting the advantages and disadvantages of leasing and buying options. The paper shows how to make an optimum decision, one must analyze the present values of the cash outflows for the different leasing and buying options.

Outline:
Abstract
Simulation Scenario and Recommendations
Risks and Uncertainties
Advantage of Present Value of Outflows
Capital Lease vs. Operating Lease
Condition of Assets
Conclusion

From the Paper:

"Bonnesante Research is small, young biotech company based in California. The company originated with a purpose to produce new, innovative, and highly profitable anti-infective drugs. Bonnesante obtains operating capital from Venture Capitalist (VC) but due to the high-risk of anti-infective drug production ventures, VC is conservative with their funding. Since acquiring assets is a major focus for the company and funding is conservative, Bonnesante must scrutinize lease and buy options."

Sample of Sources Used:

Albrecht, W.S., Stice, J.D., Stice, E.K, Swain, M.R. (2005). Accounting: Concepts and Application p. 410-467. The Thomson South-Western Corporation 9e.
Brealey, R.A., Myers, S.C., & Marcus, A.J. (2003). Fundamentals of Corporate Finance p.1-212. The McGraw Hill Companies, Inc. 4e.
University of Phoenix (2006). Week Three "Analyzing Lease vs. Buy Decisions"Simulation. FIN 325 - Financial Analysis Business Course Website: https://ecampus.phoenix.edu/secure/resource/resource.asp Sourced November 4, 2006.