SCENARIO 1: Bonnesante Research is a start-up company based in Irvine, California, focused on biotechnology and has 30 employees. As it grows, the company's asset acquisition needs to be focused. Bonnesante must submit its first drug to the Food and Drug Administration within six months. In order to run advanced analytical software for drug preparation, it is necessary to acquire a mainframe computer. Now you have to make the decision whether to rent or buy the mainframe computer. SOLUTION 1: As CFO of Bonnesante Research company, taking into consideration the opinion of my colleagues, I decided to rent the mainframe computer for 18 months instead of purchasing it. .. The reason is that the loan options proposed significantly higher cash outflows and the 18 month no down payment leasing option proposed the lowest present value of lifetime cash outflows. Since Bonnesante is not a profitable company, for this reason the expenses for the purchase of an asset will not be tax deductible and the loan option will also require recording the transaction and the related liability on the balance sheet. But through the operating leasing option, an asset will not need to be reported on the balance sheet. Additionally, the technology may become obsolete in the future and may need to be updated. For all these reasons, operational leasing is the best option available to a company right now. SCENARIO 2: Another scenario is that Bonnesante requires an advanced spectrometer for its research and development program. The cost of this spectrometer is $2,000,000, but Bonnesante now operates as a profitable company. The options are to enter into a short-term operating lease, a long-term capital lease, or purchase the spectrometer. SOLUTION 2: Since Bonnesante now operates as a profitable company, and the need for a spectrometer is a great asset for a company Research and Development and it will not be obsolete in the long term and can be used throughout its economic life which in this case is five years, which is why I feel like buying a spectrometer with a 40 year loan with a down payment of $113,608 is a good decision overall. By purchasing this asset, Bonnesante will also have the advantage of requesting it as depreciation of the asset while it will not be an option in the operating leasing since in the leasing option the lessor has the advantage of requesting depreciation, not the lessee.