Amg Lease Vs. Buy

AMG Inc. & Forsythe Solutions

Lease vs. Buy Decision

By Mark Jeffrey

Kellogg School of Management

Abstract (too long btwn 100-250 words is at 350)

AMG Inc is implementing 7,542 new PCs in the time frame of twelve months in multiple locations covering eight states. This is a $7.5 million technology financing decision.

The purpose of this researched proposal is to investigate and provide a comprehensive overview of whether leasing or buying new PCs will be more cost effective, and if leasing which lease option and payment schedule will most benefit AMG. This research was dually conducted by Adam Stolz, controller for the CFO; and Brad Steiner, information technology director. The goal of the research is to identify and document the advantages and constraints each of the options presents and analyze the data to provide financial information required to make an informed decision which would be both cost effective and within the constraints of time and technology support.

The recommendation has been reached by comparing the NPV of the lease proposal submitted by Forsythe to the NPV of the buy option. The results show that leasing the PCs is more cost effective and in line with the constraints of IT roll out than that of the best case scenario for buying PCs. The lease proposal presented by Forsythe also includes 2 lease line options and allows AMG the freedom of either leasing or buying the software needed. These options have been researched and it has been concluded that a 24 month operating lease on hardware with a rolling lease line is the best choice for AMG. With IT restrictions