AMG Inc. & Forsythe Solutions: Lease vs. Buy Decisions Harvard Case Solution & Analysis

Considering renting or buying decision to invest in the technology. Address key investment issues such as changing the length of the lease, the useful life of the equipment, as well as coordination with the overall financial strategy. The script for the actual financial services that were masked for privacy reasons. Gifts investment decision: the company is to buy or rent a technology with a relatively short useful life? New controller for AMG, Fortune 500 financial services, has been tasked to determine how to finance the purchase of new 7542 PC, which will be implemented over the next 12 months. This $ 6.7 million of investment decisions and the deployment schedule adds considerable complexity in the decision. The controller must choose between buying or leasing computers to 24 - or 36-month period. Provides a framework for the analysis of similar investment decisions. The key point is that learning technology leasing information can be cheaper than buying. This is contrary to rent a car, which may be familiar with the everyday experience. The new car has a potentially long life and can save a lot of value in a few years, therefore, the intuition is that the purchase should always be cheaper than leasing. Shows that this does not apply to information technology. Teaches proper use mid-quarter convention in MACRS depreciation technologies and the impact of the operating vs. capital lease financing and off-balance. In the process, introduces the four challenges for financial leasing. Finally, we show how creative methods of analysis can be used to simplify complex decisions. These methods help to achieve a conclusion more quickly and with less effort. "Hide
by Mark Jeffrey, H. Nevin Ekici, Cassidy Shield, Mike Conley Source: Kellogg School of the 8 pages. Publication Date: January 1, 2006. Prod. #: KEL217-PDF-ENG

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AMG Inc. & Forsythe Solutions: Lease vs. Buy Decisions

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