Week Four Assignment Caledonia - Essay Example

Thus, the yearly cash inflows realized in Project A can be utilized for another investment that will even yield more than $40,000 profit by the end of 4 years. It is through utilizing the IRR formula that reflects the acceptability of Project A because IRR considers all cash flows and time value of money, both crucial and important in the real business world. When analyzing the financial considerations under the lease versus buy decision process, one needs to consider the LCC (Life Cycle Cost) of either leasing or buying and operating and maintaining the hardware.

The most meaningful financial comparison is the cost of lease financing versus the cost of debt financing (which are both not mentioned on this given problem). While comparing absolute LCC is important, it is equally critical to take into consideration fiscal budgetary constraints. While the LCC of leasing may be higher over the entire term the hardware is leased, the annual expenditures may fit better with budgetary limitations. However, the lease versus buy decision cannot be based purely on financial data or budgetary considerations.

The decision must be made on a best value consideration. A best value selection analysis would introduce intangible benefits that could be benefits of either leasing or