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Related Experiment Videos

Analyzing lease/purchase options.

D Ciolek1, J D Mace

  • 1Alliance Corporate Resources, Inc., Columbus, OH, USA.

Radiology Management
|April 7, 1998
PubMed
Summary
This summary is machine-generated.

This study details a two-phase financial analysis for equipment acquisition, focusing on cash flow. It emphasizes comparing the internal rate of return (IRR) for purchasing versus leasing to determine the best financial strategy.

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Area of Science:

  • Financial Analysis
  • Corporate Finance
  • Equipment Acquisition

Background:

  • Previous article covered lease selection.
  • Need for proper financial analysis in equipment acquisition.

Purpose of the Study:

  • To explain a two-phase financial analysis for equipment acquisition.
  • To guide readers through financial analysis using a representative example.

Main Methods:

  • Two-phase financial analysis approach.
  • Pretax, aftertax, and cash flow analyses.
  • Comparison of purchase versus lease internal rate of return (IRR).

Main Results:

  • Detailed guidance for the first phase of financial analysis.

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  • Identification of key elements for the second phase.
  • Emphasis on cash flow analysis for financial decision-making.

    • Conclusions:

    • Cash flow analysis, particularly IRR, is crucial for evaluating equipment acquisition.
    • The presented method aids in making informed financial decisions between purchasing and leasing.