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RENT vs BUY DETAILED ANALYSIS
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INPUTS
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Equipment Purchase Price$25,000
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Daily Rental Rate (if renting)$500
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Expected Days Needed Per Year30
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Years You Need This Equipment3
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Salvage Value at End of Period$5,000
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SCENARIO 1: RENT
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Annual Rental Cost$15,000
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Total Rental Cost (all years)$45,000
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Tax Deduction (100% expense)$45,000
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Tax Savings$13,500
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NET COST TO RENT$31,500
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SCENARIO 2: BUY (with Section 179)
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Purchase Price$25,000
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Section 179 Deduction (Year 1)$25,000
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Year 1 Tax Savings$7,500
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Annual Operating Costs (maint+ins)$875
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Total Operating Costs (all years)$2,625
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Salvage Value Received$5,000
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Tax on Gain (if sale > book)$1,500
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NET COST TO BUY$16,625
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COMPARISON
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Cost to RENT$31,500
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Cost to BUY$16,625
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SAVINGS FROM BUYING$14,875
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RECOMMENDATION
✓ BUY - Saves $14,875
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NPV ANALYSIS (Time Value of Money)
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NPV of Renting$27,060
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NPV of Buying$16,977
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NPV Advantage of Buying$10,083
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