Costs of Ownership by tum19250

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									                                        Cost of Ownership
    Cost
                          Description           Year 1   Year 2   Year 3   Year 4   Year 5 Total Cost
  Categories



Purchase Price

                                                    $0       $0       $0       $0       $0         $0


Repair &
Maintenance

                                                    $0       $0       $0       $0       $0         $0
Special
Equipment or
Supplies (Not
included in
Purchase Price)                                     $0       $0       $0       $0       $0         $0

Delivery,
Transportation,
or Installation
                                                    $0       $0       $0       $0       $0         $0

Training or
Technical
Support
                                                    $0       $0       $0       $0       $0         $0



Insurance

                                                    $0       $0       $0       $0       $0         $0


Other (please
list)

                                                    $0       $0       $0       $0       $0         $0




Total Cost of Ownership                             $0       $0       $0       $0       $0         $0
                                 Benefits
Quantifiable
                   Description        Year 1     Year 2   Year 3   Year 4   Year 5 Total Cost
 Benefits

Cost Reduction
                                            $0       $0       $0       $0       $0         $0

Increased
Productivity
                                            $0       $0       $0       $0       $0         $0
Improved
Quality of
Service                                     $0       $0       $0       $0       $0         $0

Improved
Health or Safety
                                            $0       $0       $0       $0       $0         $0
Reduced
Maintenance or
Operations                                  $0       $0       $0       $0       $0         $0

Other (please
list)
                                            $0       $0       $0       $0       $0         $0




Total Benefits                              $0       $0       $0       $0       $0         $0

Quantifiable
But Not
                                       Description
Monetized
Benefits



Non-
Quantifiable                           Description
Benefits
                          Summary of Costs and Benefits

Discount Rate =               4.7%

                            Year 1        Year 2        Year 3        Year 4        Year 5
Costs of Asset                       $0            $0            $0            $0            $0

Benefits of Asset                    $0            $0            $0            $0            $0

Net Benefits                         $0            $0            $0            $0            $0

Net Present Value                    $0            $0            $0            $0            $0

Total Net Present Value              $0
                    Purchase Option Example
Lease and Installment Purchase Analysis Example
An agency has decided to purchase a new copy machine. The agency uses a 36-
month life cycle for copy machines. Therefore, the equipment will need to be replaced
at that time. In considering whether to purchase, lease-purchase, or lease the
equipment, the agency has the following information:



                   Item                       Cost
Copy Machine                                   $5,000
Expected Residual Value                          $575
Discount Rate                                   4.7%
Semi-Annual Lease-Purchase Payment               $920
Semi-Annual Lease Payment                        $860
Ancillary Costs                                    $0


Discount Rate =                       4.7% To determine current discount rate select link below:
                               DISCOUNT RATES FOR LEASE PURCHASE ANALYSIS
                               http://www.whitehouse.gov/omb/circulars/a094/a94_appx-c.html
PURCHASE
                                                                              Present
                      Year 1     Year 2      Year 3     Year 4      Year 5     Value
Purchase Price or
Annual Payment        $5,000                                                    $5,000
Ancillary Costs*        $0           $0        $0         $0          $0            $0
                                                                                $5,000

Residual Value          $0           $0       $575        $0         $0           $501
                                               Present Value Total Cost =       $4,499




LEASE PURCHASE OR INSTALLMENT PURCHASE
                                                                              Present
                      Year 1     Year 2      Year 3     Year 4      Year 5     Value
Purchase Price or
Annual Payment        $1,840     $1,840      $1,840       $0          $0        $5,039
Ancillary Costs*        $0         $0          $0         $0          $0            $0
                                                                                $5,039

Residual Value          $0           $0       $575        $0         $0           $501
                                               Present Value Total Cost =       $4,538




LEASE
                                                                              Present
                      Year 1     Year 2      Year 3     Year 4      Year 5     Value
Purchase Price or
Annual Payment         $1,720      $1,720      $1,720         $0         $0          $4,710
Ancillary Costs*         $0          $0          $0           $0         $0              $0
                                                                                     $4,710

Residual Value           $0          $0          $0         $0         $0                $0
                                                 Present Value Total Cost =          $4,710


*If the terms of the lease or purchase include ancillary services or costs that differ by
purchase option, the costs should be included. Examples of ancillary services include:
construction, installation, site, design, management, repair and improvement,
and operation and maintenance costs.
                    Purchase Option Template
Analysis Template for Lease and Installment Purchase Decisions


Discount Rate =                         4.7% To determine current discount rate: select link below:
                                 DISCOUNT RATES FOR LEASE PURCHASE ANALYSIS
                                 http://www.whitehouse.gov/omb/circulars/a094/a94_appx-c.html
PURCHASE
                                                                                  Present
                       Year 1      Year 2      Year 3      Year 4      Year 5      Value
Purchase Price or
Annual Payment           $0                                                                 $0
Ancillary Costs*         $0          $0          $0           $0         $0                 $0
                                                                                            $0

Residual Value           $0          $0          $0         $0         $0                   $0
                                                 Present Value Total Cost =                 $0




LEASE PURCHASE OR INSTALLMENT PURCHASE
                                                                                  Present
                       Year 1      Year 2      Year 3      Year 4      Year 5      Value
Purchase Price or
Annual Payment           $0          $0          $0           $0         $0                 $0
Ancillary Costs*         $0          $0          $0           $0         $0                 $0
                                                                                            $0

Residual Value           $0          $0          $0         $0         $0                   $0
                                                 Present Value Total Cost =                 $0




LEASE
                                                                                  Present
                       Year 1      Year 2      Year 3      Year 4      Year 5      Value
Purchase Price or
Annual Payment           $0          $0          $0           $0         $0                 $0
Ancillary Costs*         $0          $0          $0           $0         $0                 $0
                                                                                            $0

Residual Value           $0          $0          $0         $0         $0                   $0
                                                 Present Value Total Cost =                 $0


*If the terms of the lease or purchase include ancillary services or costs that differ by
purchase option, the costs should be included. Examples of ancillary services include:
construction, installation, site, design, management, repair and improvement,
and operation and maintenance costs.
     Risk Assessment - (Required for projects over $500,000)


    Example of how Risks can be Documented

                                        Risk Associated with doing the Project / Acquisition
Risk Assessment                         Viable                               Viable                              Viable
                                        Probability
                                        Alternative       Impact             Probability
                                                                             Alternative    2   Impact           Probability
                                                                                                                 Alternativ Impact

Risk 1 – a description of risk 1        High           Medium                Low            Low                  Medium       Low
Risk 1 General Mitigation               Specific Strategy                    Specific Strategy                   Specific Strategy
Strategy
…
Risk 2 – a description of risk 2        Low            Medium                Medium         Low                  Medium       Medium
Risk 2 General Mitigation               Specific Strategy                    Specific Strategy                   Specific Strategy
Strategy
…



Risk of Not Proceeding with (Status Quo)
Risk Assessment                                       Status Quo
                                        Probability       Impact


Risk 1 – a description of risk 1        High           Medium
Risk 1 General Mitigation               Specific Strategy
Strategy
…
Risk 2 – a description of risk 2        Low            Medium
Risk 2 General Mitigation               Specific Strategy
Strategy
…


     Checklist for Risk Assessment
¨     Have all general risks been identified?
¨     Have all risks specific to each alternative been identified?
¨     For each risk has the specifics of each alternative been taken into consideration when evaluating the probability and impact?
¨     Has a risk mitigation strategy been identified for unacceptable levels of risk?
¨     Have the risks related to Status Quo been identified?

								
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