What is the advantage of computing the present value of outflows in making lease vs. buy decisions?
It is the essence of the decision; In buying you are presumably having 1 large outflow now - and 1 inflow at a much later time (at disposition), and several compensating tax inflows as there are depreciation considerations that leases don't receive. In leasing you will have several small payment outflows over the same time - which will have a different tax benefit (expenses are tax benefits) - than purchasing. The value (or worth) of the purchase outflow now is clear. The value (or actual cost) of commiting resources to future outflows needs to be calculated, as does the actual value of getting some sum of money in a future period. All based on the very real aspect that time is money...interest over time earns money...money is worth less in the future, etc. (Receiving $1 today is worth a different amount than receiving $1 say in 10 years). In a purely business financial decision, the one which has the lesser cost, lease or buy, would be the one to do.
What is the advantage of computing the present value of outflows in making lease verses buy decisions?
Answer If your in business it is best to lease and get the deduction. If not, buy and make it last. Another Answer: Because there are advantages and disadvantages to both leasing and buying, you need to know initial costs and future dollar value in both. The ROI (Return On Investment) will differ depending on incomes and expenses over time and you need to compare the two side by side
Explain the advantage in having an inducible enzyme system that is regulated by the presence of a substrate?
Present value is the result of discounting future amounts to the present. For example, a cash amount of $10,000 received at the end of 5 years will have a present value of $6,210 if the future amount is discounted at 10% compounded annually. Net present value is the present value of the cash inflows minus the present value of the cash outflows. For example, let's assume that an investment of $5,000 today will result in…
What is the advantage of computing the present value of outflows in making lease versus buy decision?
The advantage is that you take into account the time value of money. That sounds complex and is somewhat complex. What is the time value of money? There are advantages to getting a dollar today versus getting a dollar at a later date. If you have a dollar today you could invest it and earn money with it. If you get you dollar later you cannot invest in thus you cannot earn money with it…
There's no advantage but disadvantage which causes an advantage of being aware of an ever present disadvantage . During an interview by Billy Jean King tennis player Authur Ashe stated the hardest thing in life he had to deal with was racism. When only one race has an advantage we are all at a disadvantage.