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Capital Purchase

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1. Describes capital item and how purchase (new digital mammogram machine) supports management goals, organizational goals, and or meets a specific need.
2. Who are the primary stakeholders and how will view/support this purchase?
3. What are the risks of pursuing or not pursuing this project?
4. Explains the effect of the purchase on the economic environment of the organization and justifies the expense related to goals

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Capital items are items included in the balance sheet as assets and are written off or depreciated over more than one financial year or accounting period of the organization. The benefit of such an asset is utilized over a minimum period of 2 years or more in the organization. In layman terms, capital items can be termed as those goods that are expected to yield benefits or will be used in the organization for a longer period of time and usually cost a large sum of money for the organization. Examples of capital items include land, machinery and equipment, etc.

Purchase of capital items such as digital mammogram machine helps an organization to perform several tasks with efficiency and ease. For example, a digital mammogram machine will help a healthcare organization such as hospital to offer better diagnostic ...

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Lease Vs. Buy, Financing and Capital Structure, how firms raise capital and the roles of intermediaries

1) Lease or Buy. Your company wants to purchase a new network file server for its wide-area computer network. The server costs $75,000. It will be completely obsolete in three years. Your options are to borrow the money at 10 percent or to lease the machine. If you lease, the payments will be $27,000 per year, payable at the end of each of the next three years. If you buy the server, you can depreciate it straight-line to zero over three years. The tax is 34 percent. Should you lease or buy?

2) Financing and Capital Structure: Construct a project analysis under conditions of uncertainty; construct a lease vs buy analysis. Prepare an EBIT/EPS analysis.

3) Examine how firms raise capital and the roles of intermediaries.

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