Investment Analysis; Lease Vs. Purchase - HP 12c Platinum Reference Manual

Lease vs. Purchase

An investment decision frequently encountered is the decision to lease or purchase capital
equipment or buildings. Although a thorough evaluation of a complex acquisition usually
requires the services of a qualified accountant, it is possible to simplify a number of the
assumptions to produce a first approximation.
The following HP 12C Platinum program assumes that the purchase is financed with a
loan and that the loan is made for the term of the lease. The tax advantages of interest
paid, depreciation, and the investment credit which accrues from ownership are compared
to the tax advantage of treating the lease payment as an expense. The resulting cash flows
are discounted to the present at the firm's after-tax cost of capital.
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Investment Analysis

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007, 42 11
008, 44 1
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010, 44 9
011, 45 12
012,44 48 2
013, 45 5
014, 13
015, 45 6
016, 11
017, 45 7
018, 12
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020, 42 24
021,44 40 1
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