Hi, I am really enjoying this excel finance course very helpful
Do you have any examples on lease vs buy calculations where you calculate the NPV, particularly for items such as rental of photocopies which would have monthly lease payments (outflow) and no revenue (inflow)
Please advise
Regards,
Reshma
This is a great question.
If you want to use the techniques of this seminar/workshop, all you have to do is compare the purchase price of the equipment (in your case the photocopier) with the NPV of the monthly payments using YOUR (discount) rate: the NPV or present value of the lease payments =PV(rate,nper,pmt)
Where
rate = YOUR rate
nper = the number of periods of the lease
pmt = the monthly payment
You have to assume that the leasing company or the bank may use a different rate than you are using.
HOWEVER, the decision to lease may not be only a pure Present Value comparison. Companies or individuals lease because of cash flow constraints or even tax advantages where they can use the lease payments as a business expense.
