10/19/1977 (2) - Laserfiche WebLink

Home Browse Search

would be stable and could not rise with inflation. A third option then is whether to upgrade to a larger model of our present computer, with the possibility of eventual purchase. The purchase versus lease equation yields a far lower price for purchase, so long as interest rates are favorable. A second way to compare lease versus purchase is to calculate the foregone interest expense in place of loan interest. I chose the second method for this comparison because investment interest rates are stabler and easier to predict. Because this third option represents at least a seven year commitment, it can only be considered when a stable situation exists. The people making the decision must feel comfortable with the performance of the equipment, and the department operating it, before this should be feasible. I would not recommend purchase at this time because there have been too many unfulfilled promises in the -.past. What may be considered at this time is a'lease/purchase option. .Under this arrangement the equipment would be leased for one or two years at a price which would be immune from inflation. Approximately sixty percent of our lease payments would go towards eventual purchase. At any point in time we could either purchase the equipment or go on leasing. There are two local precedents for purchase. Both the cities•of Melbourne and Cocoa have purchased the same model computer which I am recommending we lease. The main reason for not selecting this course of action is that direct costs would increase initially if not offset by cost reductions in other areas or by outside revenue. Because the Board has been promised cost reductions before which never materialized these are difficult to count upon too heavily. What may be considered instead is my personal track record and what I have delivered in the past. The Cocoa City Council purchased their System/3 Model 15 computer upon -3- d' i ®CT 191977 s,