Managerial Decisions in Economic Terms Essay Example | Topics and Well Written Essays - 2000 words

Managerial Decisions in Economic Terms - Essay Example The project makes suitable assumptions, like, the present value of discounting, the number of miles that car intends to run and the charge involved in travelling the extra miles over and above the stipulated miles allowed in the lease contract. Finally, a comparison is made between the present values of the two alternatives. It discusses three situations. It finds the present value of the car purchase, present value of the car purchase using a loan and the present value of the lease along with purchasing option. The project seeks to find the best and the most cost effective alternative from the above three cases. This project tries to find out the basis of applying managerial decisions under different circumstances. In this case, decision has to be taken between the two alternatives of buying a car or leasing it. The best possible way is to compare the costs involved in both cases. The aim of the project is to find out the most cost effective method of transaction by calculating the present value of the discounted cash flow. Firstly, it discusses the advantages and disadvantages of leasing and owning a car and the costs involved in both cases. This project aims to help managers in making decisions between a lease and a purchase. An analysis is conducted under three given situations before a conclusion is drawn. It is not a simple method and involves a host of other factors like the number of miles that the buyer intends to travel, and the rates of interest prevailing at that time. The managerial decision of whether to lease or buy a car is of primary concern in this project. The project will act as the mouthpiece for a public school system which is to decide whether it would economical to lease a car or to buy it. Both have got their respective benefits and costs. The motive of the project is to detect which would be the most cost effective method. In order to come to a final decision, a comparison of costs needs to be done which will take into