Assignment
Scenario
Health resources are finite. Therefore, it is incumbent on all health organizations to exercise responsible fiscal decision making when allocating their financial resources.
As the senior cost analyst for a local, nonprofit hospital, you are charged with determining the most appropriate use of financial resources and making recommendations. Your organization is seeking to secure a new CT Scan unit for the expanded emergency department. The hospital has the option of leasing the equipment or purchasing the equipment.
The cost to purchase the CT scan is $1,300,000 at 10% (PV), with straight line depreciation over 5 years. The trade-in value $130,000 at the end of its useful life. The maintenance expense equals $12,000 annually.
The cost to lease the equipment is $26,000 per month for a period of 60 months, which includes all maintenance costs. The tables below provide the financial overview of the purchase and lease costs.
Instructions
In a written case analysis, use the figures provided in the tables to discuss the following:
A. Compare and contrast leasing versus purchasing. You may use the Rasmussen library to research articles addressing lease versus purchase decisions in order to support your assertions.
B. Calculate the figures relative to the principal payment, interest payment, maintenance expense, total expense, and PV expense and complete the tables attached in document as pictured above.
C. Provide a detailed explanation of the costs associated with leasing the equipment as depicted in the table.
D. Provide a detailed explanation of the costs associated with purchasing the equipment as depicted in the table.
E. Discuss the potential tax implications of leasing the equipment, assuming that the organization is a nonprofit.
F. Discuss the potential tax implications of purchasing the equipment, assuming that the organization is a nonprofit.
G. Recommend a course of action and the implications that your recommendation may have for the organization.
Format your assignment according to the give formatting requirements:
• The answer must be using Times New Roman font (size 12), double spaced, and typed, with one-inch margins on all sides.
• The response also includes a cover page containing the student's name, the title of the assignment, the course title, and the date. The cover page is not included in the required page length.
• Also include a reference page. The references and Citations should follow APA format. The reference page is not included in the required page length.