Equipment Lease vs. Buy Cash Flow Matrix
Compare the real, discounted cost of leasing against buying outright.
Assumptions
Compares full cash purchase against leasing.
Net present value comparison
Higher (less negative) NPV is the cheaper option.
Buy — NPV
-$96,043.74
Lease — NPV
-$86,242.54
Leasing is cheaper by $9,801.20 in present-value terms.
Cumulative cash flow by year
| Year | Buy (cumulative) | Lease (cumulative) |
|---|---|---|
| 0 | -$120,000.00 | $0.00 |
| 1 | -$114,000.00 | -$21,600.00 |
| 2 | -$108,000.00 | -$43,200.00 |
| 3 | -$102,000.00 | -$64,800.00 |
| 4 | -$96,000.00 | -$86,400.00 |
| 5 | -$90,000.00 | -$108,000.00 |
About this tool
Enter equipment cost, useful life, tax rate, and lease terms, and instantly compare the net present value of buying versus leasing — factoring in the depreciation tax shield on a purchase against the after-tax cost of lease payments over your full analysis period.
How to use Equipment Lease vs. Buy Cash Flow Matrix
- 1
Enter the equipment's purchase cost, useful life, and your effective tax rate.
- 2
Enter the monthly lease payment you're being offered for the same equipment.
- 3
Set your analysis period and discount rate — the rate you'd otherwise earn or pay on capital.
- 4
Compare the two NPV figures — whichever is higher (less negative) is the cheaper option in present-value terms.
Frequently asked questions
Related tools
PDF Invoice & Receipt Builder
Create a branded invoice or receipt and download it as a PDF.
Freelance Rate & Proposal Calculator
Turn your income goals into an hourly rate and project quote.
E-Commerce Break-Even & Profit Margin Matrix
Know the exact ROAS and CPA that keep a product profitable.