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.
Purchase
Lease
Instructions
In a written case analysis, use the figures provided in the tables to discuss the following:
- 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.
- Calculate the figures relative to the principal payment, interest payment, maintenance expense, total expense, and PV expense and complete the tables linked here .
- Provide a detailed explanation of the costs associated with leasing the equipment as depicted in the table.
- Provide a detailed explanation of the costs associated with purchasing the equipment as depicted in the table.
- Discuss the potential tax implications of leasing the equipment, assuming that the organization is a nonprofit.
- Discuss the potential tax implications of purchasing the equipment, assuming that the organization is a nonprofit.
- Recommend a course of action and the implications that your recommendation may have for the organization.
Rubric:
- Criterion 1
0% of total gradeA – 4 – MasteryClear and thorough discussion comparing and contrasting leasing versus purchasing. Includes multiple examples to support assertions.0B – 3 – ProficiencyDetailed discussion comparing and contrasting leasing versus purchasing. Includes at least one example to support assertions.0C – 2 – CompetenceBasic discussion comparing and contrasting leasing versus purchasing.0F – 1 – No PassInsufficient discussion comparing and contrasting leasing versus purchasing.0I – 0 – Not SubmittedNot Submitted0
- Criterion 2
0% of total gradeA – 4 – MasteryClear and thorough calculations of the figures relative to the principal payment, interest payment, maintenance expense, total expense, and PV expense.0B – 3 – ProficiencyDetailed calculations of the figures relative to the principal payment, interest payment, maintenance expense, total expense, and PV expense.0C – 2 – CompetenceBasic calculations of the figures relative to the principal payment, interest payment, maintenance expense, total expense, and PV expense.0F – 1 – No PassInsufficient calculations of the figures relative to the principal payment, interest payment, maintenance expense, total expense, and PV expense.0I – 0 – Not SubmittedNot Submitted0
- Criterion 3
0% of total gradeA – 4 – MasteryClear and thorough explanation of the costs associated with leasing the equipment as depicted in the tables.0B – 3 – ProficiencyDetailed explanation of the costs associated with leasing the equipment as depicted in the tables.0C – 2 – CompetenceBasic explanation of the costs associated with leasing the equipment as depicted in the tables.0F – 1 – No PassInsufficient explanation of the costs associated with leasing the equipment as depicted in the tables.0I – 0 – Not SubmittedNot Submitted0
- Criterion 4
0% of total gradeA – 4 – MasteryClear and thorough explanation of the costs associated with purchasing the equipment as depicted in the tables.0B – 3 – ProficiencyDetailed explanation of the costs associated with purchasing the equipment as depicted in the tables.0C – 2 – CompetenceBasic explanation of the costs associated with purchasing the equipment as depicted in the tables.0F – 1 – No PassInsufficient explanation of the costs associated with purchasing the equipment as depicted in the tables.0I – 0 – Not SubmittedNot Submitted0
- Criterion 5
0% of total gradeA – 4 – MasteryClear and thorough discussion on the potential tax implications of leasing the equipment.0B – 3 – ProficiencyDetailed discussion on the potential tax implications of leasing the equipment.0C – 2 – CompetenceBasic discussion on the potential tax implications of leasing the equipment.0F – 1 – No PassInsufficient discussion on the potential tax implications of leasing the equipment.0I – 0 – Not SubmittedNot Submitted0
- Criterion 6
0% of total gradeA – 4 – MasteryClear and thorough discussion on the potential tax implications of purchasing the equipment.0B – 3 – ProficiencyDetailed discussion on the potential tax implications of purchasing the equipment.0C – 2 – CompetenceBasic discussion on the potential tax implications of purchasing the equipment.0F – 1 – No PassInsufficient discussion on the potential tax implications of purchasing the equipment.0I – 0 – Not SubmittedNot Submitted0
- Criterion 7
0% of total gradeA – 4 – MasteryComprehensive recommendations for a course of action and the implications that the recommendation may have for the organization.0B – 3 – ProficiencyElaborative recommendations for a course of action and the implications that the recommendation may have for the organization.0C – 2 – CompetenceBasic recommendations for a course of action and the implications that the recommendation may have for the organization.0F – 1 – No PassInsufficient recommendation for course of action and the implications that the recommendation may have for the organization.0I – 0 – Not SubmittedNot Submitted0
