To Buy or Not to Buy- Lease vs. Buy Decisions

During the course of Week 2 in Finance 325 students were asked to complete a simulation titled "Analyzing Lease vs. Buy Decisions." Bonnesante Research is a strong biotech start-up based in Irvine, California. Bonnesante is trying to tap into the very profitable anti-infective drug segment of the pharmaceutical market. In order to do so Bonnesante requires additional capital purchases over a 6-7 year period. Acting as the firm's Chief Financial Officer (CFO) students were tasked with selecting the optimal mode of financing the company's acquisitions. This simulation was divided into three parts and required students to determine which financing options would be the preferred method of purchase for the mainframe computer, spectrometer, and production facility. Students were asked to consider Capital Leases, Operational Leases, and outright purchasing while also taking into consideration financial pitfalls and regulatory issues.…