To BUy or Not to Buy- Lease vs. Buy Decisions

During the course of Week 2 in Finance 325 students were asked to complete a simulation titled "Analyzing Lease vs. Buy Decisions." Bonnesante Research is a strong biotech start-up based in Irvine, California. Bonnesante is trying to tap into the very profitable anti-infective drug segment of the pharmaceutical market. In order to do so Bonnesante requires additional capital purchases over a 6-7 year period. Acting as the firm's Chief Financial Officer (CFO) students were tasked with selecting …

…be placed in complex situations where arithmetic wasn't the only answer. Students were also confronted with some tough questions: What is the economic life of the asset being acquired? What is the rate of obsolescence? What will the impact of these purchases be on present cash flow? What tax benefits, if any, are there at year's end? The answers to these and other questions will help influence the decision making process regarding large corporate expenses.