[ale] Compaq Reliant web server

[Dan Mount]

-----Original Message-----
From: Bao C. Ha [mailto:baoha at sensoria.com]
To: ale at ale.org
Sent: Thursday, July 12, 2001 1:22 PM
To: ale at ale.org
Subject: RE: [ale] Compaq Reliant web server

<snip>

All of the computers are replaced by leased ones.  The
3 year-leases cost more than just to buy the computers
outright.

Unfortunately, your tax-payer money is paying for these
mis-management mistakes, which actually showed up as
progresses.  This was an IT department which rebooted
Unix servers at least once a week to fix a memory leak
problem.

</snip>

I'm not an accountant (bean counters feel free to elaborate/correct me),
I'm not sure of specific numbers, but here is how I understand the lease
versus purchase decision.

Would you rather come up with all of that cash out of pocket, or pay for
it over time? A company buying large amounts of equipment would run out
of cash trying to buy all of the equipment that it might need. If you
lease, you just start making monthly payments. Also leasing gives the
company opportunities to write off the cost of the equipment in the time
of the lease. At the end of the lease the company would probably replace
the equipment anyway. Why not finance? Well, in certain cases it might
be attractive, but leasing generally gives the company more cash in hand
and a quicker 'depreciation' versus purchase. Go talk to your bean
counter about capitol expenditures versus leasing and he/she can give
you more insight to the tax/financial implications that each brings.

DM

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