In an attempt to spend their money wisely, many government
agencies delay buying new equipment and/or facilities
for as long as possible. Few appreciate how much these
delays actually cost them in inflation. The reality
of the situation is that the inflation of capital equipment
normally outpaces the low tax-exempt interest rates
found in leasing with governments.
In an attempt to spend their money wisely, many government
agencies delay buying new equipment and/or facilities
for as long as possible. Few appreciate how much these
delays actually cost them in inflation. The reality
of the situation is that the inflation of capital equipment
normally outpaces the low tax-exempt interest rates
found in leasing with governments.
It is easy to see why it makes sense to spend $27,877.32
to save $38,997.52 - a $11,120.20 savings!
In 5 years, the cost of a $180,000
fire truck will inflate by:
$38,997
Over the same 5 years period, the
interest cost on a tax-exempt lease will be:
- $27,877
--------------
The savings you will realize by
leasing your fire truck now will be:
$11,120
In summary, it is commendable that you are working
so hard to save your agencies money by avoiding interest
payments. However, it is imperative that you consider
the cost of inflation as well as interest in your decision
making.
