The Return On Investment By Purchasing Equipment
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There are several reasons to consider purchasing new equipment for your business. You may want to develop new profit centers inside of your business, replace equipment that is reaching the end of its life, or keep more of your top line revenue by switching to equipment with greater efficiency, both in terms of operating cost and space used.
Purchasing equipment is a crucial business decision. A major key in that decision is how much benefit (return) the business will realize over time from the purchase (investment.)
This article will demonstrate how to calculate the return on investment when purchasing equipment for your business.
Terms to Understand
Return on Investment (ROI): a benchmark used to evaluate the gain on an investment in comparison to the initial amount invested.
Pay Back Period (PBP): an estimate of the number of years needed for the equipment to pay for itself.
Useful Life: the number of years a piece of equipment can operate.
Residual Value: the value of the equipment at the end of its useful life.
