II. MODEL FORMULATION
In this section, we define a two dimensional lease contract and other concepts that will be used later, such as the failure model and the formulation of a PM policy and its effect on reliability.
Fig. 1. Key elements of lease contract considered
Notations:
ΩΓ=[0,Γ0)× [0,∞) : Lease coverage region δy :Preventive maintenance level
D :Total downtime in (0,t] :Revenue, lease contract time
Y :Usage rate
C0 :Preventive maintenance cost per unit of time
Cv :Degree of preventive maintenance cost :Penalty cost per unit of time
Pn,Pu :Lease contract cost for used equipment and lease contract cost for new one over the contract period k :Number of PM during maintenance contract :Annual cost over the contract period
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We study the lease contracts proposed from the view points of the lessor and the lessee. The decision problem for the lessor is to determine the optimal price structure (i.e. the price of each lease option) such that to maximize the expected profit whilst the lessee is concerned with the best option which maximizes its expected …show more content…
Modelling of Failure
We now model equipment failures under the two-dimensional lease contract. There are three different approaches to model failures occurring in a two-dimensional lease region [14]. In this paper, the one dimensional approach as in [15] is used to modeling the failures. Let be a usage rate of the truck. We consider that varies from truck to truck but is constant for a given truck (or agiven equipment). For a given truck with , the lease contract ceases at for 0 < ∞.
Let be the conditional hazard function for the time to first failure for a given dump truck. As it is a repairable item, then failures are appropriate to model using the conditional hazard function . It is considered as a non-decreasing function of the age t and the usage rate y. We assume that is given by which is allowed to incorporate the age and usage for modeling the degradation the truck. As in general the usage rate does more impact to the degradation of the equipment, where . In other words, the truck with high usage intensity degrades much faster than that of the truck with low usage intensity . Furthermore, for a given truck, if all failures under the lease contract are minimally repaired and repair times are very small relative to the mean time between failures, then failures follow a non-homogeneous Poisson process (NHPP) with intensity function
This case study examines various real estate contracts – the Real Estate Purchase Contract (REPC) and two addendums labeled Addendum No. 1 and Addendum No. 2 – pertaining to the sale of 1234 Cul-de-sac Lane in Orem, Utah. The buyers in this contract are 17 year old Jon D’Man and 21 year old Marsha Mello; the seller is Boren T. Deal. The first contract created was Jon and Marsha’s offer to purchase Boren’s house. This contract was created using the RESC form, which was likely provided by their real estate agent as it is the required form for real estate transactions according to Utah state law. The seller originally listed the house on a Multiple Listing Service (MLS); Jon and Marsha agreed that the asking price was too high for the neighborhood (although we are not given the actual listing price), and agreed to offer two-hundred and seven-thousand dollars ($207,000) and an Earnest Money Deposit of five-thousand dollars ($5,000). Additionally, the buyers requested that the seller pay 3% which includes the title insurance and property taxes. After the REPC form was drafted, the two addendums were created. Addendum No. 1 is from the seller back to the buyer, and Addendum No. 2 is the buyer’s counteroffer to the seller.
12. The lease time is the amount of time the DHCP server assigns an IP address to a client. During the lease time, the DHCP server will not assign the IP given to the client to another client, unless it is released by the client. Once the lease time has expired, the IP address can be reused by the DHCP server to give to another client. In my experiment, the lease time is 3 days.
For one, if there is a low-end estimate on the cost of renovation and equipment, then the Build option’s NPV goes up to $903,489, a $498,351 increase over the base case’s NPV of $405,138. However, it would be unfair to compare this figure to the base case NPV for the Lease option, and indeed in comparison to the low-end estimate for the cost of renovation and equipment in the Lease option, the Lease option has the better NPV ($924,173). When examining the converse situation (high-end estimate), the Lease option still has a better NPV than the build
o The remaining $125,000 up front charge would not be owed until ICEDELIGHTS provided one acceptable location and the lease was signed
In the state of Massachusetts, laws exist to protect the consumer from purchasing a vehicle that has substantial defects that impair any of the following: ability to use a vehicle, the vehicle’s market value, or the safety of the vehicle. Your new or leased vehicle is protected for one year or 15,000 miles from the date of delivery, whichever is reached first by the vehicle. Your new or used car qualifies as a “lemon” if the vehicle has been repaired for the same defect 3 or more times or if the total time spent on repair has equaled or exceeded 15 business days.
Vehicle depreciation also varies with a purchase or a lease. If someone is buying, the tax deduction will equal the full depreciation of assets per the I.R.S. schedule. If leasing it is optional to buy out the lease at the end of the term, rather than go by the I.R.S. schedule. With buying, the finance period can extend beyond the warranty period, unless warranty options are added. In contrast, with leasing, the warranty will last for the full term of the finance period no matter what.
Alternative-for lease/sale: a contract to enter into lease (or sale), which in order to be enforceable either must be evidenced in writing and signed by the person against whom the action is taken for breach of the alleged contract and there must be a sufficient act of part performance.
The NAL still favors buying over leasing by $1216. The only other consideration would be that lease may raise the earnings on asset ratio above 12%. But since the PV of the lease payments is greater than 90% of the FMV (assuming the purchase prices is FMV), then it would be considered a capital lease and the asset would go on the Balance Sheet. Therefore there are no earning over asset ratio advantages to leasing.
Handy Andy, Inc., a maker of trash compactors, had a problem with how the distribution of their products was being done by distributors and retailers alike. The company made two models of trash compactors the standard and the deluxe, the latter having more capacity thus a higher price. The distribution of the trash compactor to the end user worked like this, a customer makes an order for a trash compactor through a licensed retailer, once the order is made the retailer buys from the distributor to fulfil that order and then delivers it to the customer. The initial agreement between Handy Andy Inc. and the distributors was based on delivering and installing all units in a period of 5 days after an order was made by a retailer, as compensation
The case presented is that of Sam Stevens who resides in an apartment. He has been working on an alarm system that makes barking sounds to scare off intruders, and has made a verbal agreement with a chain store to ship them 1,000 units. He had verbally told his landlord, Quinn, about his new invention and Quinn wished him luck. However, he recently received an eviction notice for the violation of his lease due to the fact that his new invention was too loud and interrupting the covenant of quiet of enjoyment of the neighbors and for conducting business from his apartment unit.
...n. Based on the definition of asset/liability, the operating leases items meet it. Therefore the amount should show as asset/liability off balance sheet as well.
Scholastic Company is a multibillion dollar children’s book publisher and distributor with more than 9,000 worldwide employees (Scholastic Inc., n.d.). Scholastic leases some of its physical office and storage locations and equipment (as cited in Gibson, 2011). Cornaggia, Franzen, and Simin (2013) noted the reasons firms lease may be the result of a company’s financial distress which prevents sufficient capital being raised to purchase instead of leasing. They also suggested if profitability of the firm is not at issue, leasing can be used to reduce taxes thus reducing borrowing costs. Though the reason for maintaining material lease obligations is not disclosed in its financial statements (as cited in Gibson, 2011), Scholastic’s ability to satisfy its long-term commitments is important for investors, creditors, and management. The long-term borrowing capacity of Scholastic can be determined through an analysis of its times interest earned, fixed charge coverage, and debt ratios.
For firms who are purchasing semi finished goods from outside supplier will make a contract for a long period and due to repeated relationship the fir...
If you need money to purchase assets for your business, leasing offers an alternative to traditional debt financing. Rather than borrow money to purchase equipment, you rent the assets instead. Leasing typically takes one of two forms: Operating leases usually provide you with both the asset you would be borrowing money to purchase and a service contract over a period of time, which is usually significantly less than the actual useful life of the asset. That means lower monthly payments. If negotiated properly, the operating lease will contain a clause that gives you the right to cancel the lease with little or no penalty. The cancellation clause provides you with flexibility in the event that sales decline or the equipment leased becomes obsolete. Capital leases differ from operating leases in that they usually don't include any maintenance services, and they involve your use of the equipment over the asset's full useful life.
...e steps that are required to be addressed while coming to deal with vendors. The Proposed idea, looks satisfactory in meeting the outcomes. One thing that should be ensured is that they should incorporate the clauses pertaining to risk in the plan.