Business · Calculator companion · By K Imports
Equipment lease versus purchase: practical guide
This guide explains how to use the Count.ie equipment lease versus purchase. Compare the discounted ownership and lease costs of a business asset. Follow the inputs, method and worked example below, then compare your own scenario.
Guide written .
Open the Equipment lease versus purchase calculatorWhat to prepare
- Gather supplier quotes, invoices, time records and the actual scope of the job or business decision.
- Separate revenue from VAT, direct costs from overheads, and profit from the timing of cash receipts.
- Use the same accounting period and currency for related inputs.
Understand the inputs
The calculation method
Purchase present cost = price + discounted operating costs − discounted residual value. Lease present cost discounts lease and operating payments.
Worked example
Illustrative inputs and their result.
Example inputs
- Purchase price (€)
- 50000
- Annual ownership operating cost (€)
- 3000
- Sale value at end (€)
- 15000
- Annual lease payment (€)
- 12000
- Annual lease operating cost (€)
- 1000
- Comparison period (years)
- 5
- Annual discount rate (%)
- 8
Calculated example result
- Purchase Present Cost
- €51,769.38
- Lease Present Cost
- €51,905.23
- Purchase Saving
- €135.85
How to interpret the result
A profitable estimate can still create a cash shortfall. Read the cost and timing assumptions as well as the headline profit, price or return; the result is a scenario, not a sales forecast.
Keep the scope constant while changing price, volume, supplier cost or time. A lower-sales or higher-cost case helps show whether the decision depends on an optimistic assumption.
Common mistakes to avoid
- Do not confuse markup on cost with margin on selling price.
- Include work that is easy to miss, such as travel, setup, rework and administration, where the model supports it.
- Do not treat tax collected or an unpaid invoice as freely available cash.
Assumptions and sources
Annual payments are in arrears. Enter consistent tax and VAT treatment; financing and capital allowances are not inferred.
If your case falls outside this scope, use a more suitable calculator or contact us about an unclear method.