| What Are the Range of Options for Equipment | | | | funds are in a low-paying account (e.g., a passbook |
| Acquisition? | | | | savings account yielding 3%) whose yield is less than |
| Cash Payments | | | | the interest on a loan or lease. In that case, taking the |
| This option assumes that there is enough cash | | | | funds from a low-yield account and losing the 3% |
| available. | | | | interest in order to avoid paying 9% or 10% is a sound |
| Advantageso It's simple and quick.o Everybody | | | | financial decision. Of course, having significant funds in |
| accepts casho Cash purchases minimize paperwork | | | | a 3% account is not wise cash management. |
| and middlemen and may help reduce purchase price. | | | | Financed Purchase |
| Disadvantageso It's generally not a good use of funds. | | | | In this method of purchase, a lender provides funds for |
| In today's investment market, you can often obtain a | | | | the purchase and generally obtains some form of lien |
| yield on your money in excess of the interest charged | | | | or other encumbrance on the equipment until the funds |
| for financing the equipment purchase. The only | | | | have been repaid. |
| rationale for paying cash for the purchase is if your | | | | |