| Course | BUS-2100 Quantitative Skills for Business |
|---|---|
| Module | Module 6 |
| Paper type | Module project 6: financial decision making |
| Length | About 833 words, 6 pages |
| Format | APA 7 student paper |
| School | Thomas Edison State University |
| Program | Bachelor of Science in Business Administration |
| Updated | October 2026 |
Free sample paper for BUS 2100 Module 6
Buy, Lease and Expand: A Landscaper's Truck and New Crew by the Numbers
Student Name
Bachelor of Science in Business Administration, Thomas Edison State University
BUS-2100: Quantitative Skills for Business
Mentor Name
Month Day, Year
Buy, Lease and Expand: A Landscaper's Truck and New Crew by the Numbers
The Decisions
A composite landscaping company near Charlotte, North Carolina, has more contracts than its four crews can handle and is considering a fifth. The crew needs a $64,000 truck and $18,000 of mowers and trailers. The owner must decide whether the crew is a good investment and, if so, whether to buy the truck with a bank loan or lease it. Wisniewski and Shafti (2020) separate these questions: the investment decision asks whether the project creates value, and the financing decision asks how best to pay for it.
Step 1: The Loan
The bank offers a five-year loan of $64,000 at 7.5 percent annual interest, with monthly payments. The monthly rate is 0.075 / 12 = 0.625 percent over 60 periods. The payment is $64,000 x 0.00625 / (1 minus 1.00625 to the power of -60), which a spreadsheet's PMT function returns as $1,282.43. Over five years the company would pay $76,945.72, of which $12,945.72 is interest.
Step 2: Buy or Lease
The dealer's alternative is a five-year lease at $1,090 per month, each payment due in advance, after which the truck goes back to the dealer. Buying means making the loan payments and then owning a truck expected to sell for about $22,000 after five years. Because the payments occur at different times, they must be compared in present value terms. Using the company's 8 percent annual cost of capital, converted to a monthly rate of about 0.643 percent, the results are as follows.
| Option | Payments | Present value of payments | Present value of resale | Net present cost |
|---|---|---|---|---|
| Buy with loan | 60 x $1,282.43 | $63,666 | -$14,973 | $48,693 |
| Lease | 60 x $1,090 (in advance) | $54,461 | none | $54,461 |
Buying costs about $5,800 less in present value, mainly because the company keeps a truck worth $22,000 at the end. The comparison assumes the same maintenance costs and ignores taxes, which can change the answer because lease payments and loan interest and depreciation are deducted differently; the owner's accountant should confirm the tax effect before signing.
Step 3: Is the Crew Worth It?
The investment decision uses the project's own cash flows, separate from how it is financed. The crew requires $82,000 at the start for the truck and equipment. After wages, fuel, insurance and maintenance, it is expected to add $26,000 a year in net cash flow for five years, and the equipment is expected to be worth $25,000 at the end, including the truck's $22,000.
| Year | 0 | 1 | 2 | 3 | 4 | 5 |
|---|---|---|---|---|---|---|
| Cash flow ($) | -82,000 | 26,000 | 26,000 | 26,000 | 26,000 | 51,000 |
| Cumulative ($) | -82,000 | -56,000 | -30,000 | -4,000 | 22,000 | 73,000 |
At 8 percent, the net present value, from the spreadsheet's NPV function plus the initial outlay, is about $38,800, so the crew adds value. The IRR function returns about 22.9 percent, the rate that would bring NPV to zero, far above the 8 percent hurdle. The simple payback period is about 3.2 years: after three years $4,000 remains to be recovered, which takes about two more months of year four's cash flow. Graham and Harvey (2001), surveying corporate financial officers, found that most always or almost always use NPV and IRR, while many also use payback as a simple check, which is how the measures are used here.
Sensitivity
The main uncertainty is the $26,000 annual cash flow, which depends on keeping the crew busy. If it were 20 percent lower, about $20,800, the NPV would fall to about $18,000, still positive. The crew would need to earn less than about $16,300 a year before NPV turned negative, which gives the owner a clear threshold for judging the risk. Brealey et al. (2023) recommend this kind of break-even analysis because it shows how far forecasts can be wrong before a decision changes.
Spreadsheet Setup
The analysis fits on one worksheet. The PMT function, with the monthly rate, 60 periods and the loan amount, returns the payment. PV with the type argument set to 1 values the lease payments made in advance, while PV with type 0 values the loan payments made at the end of each month. The resale value is discounted with a simple division by 1.08 raised to the fifth power. For the crew, the cash flows go in a row from year 0 to year 5, NPV is applied to years 1 to 5 and the year 0 outlay added separately, and IRR is applied to the whole row. Changing the cash flow cell shows the break-even directly, which is a useful check on the calculation in the sensitivity section.
Recommendation
The company should add the fifth crew, since its NPV is positive under reasonable assumptions and its IRR far exceeds the cost of capital. It should buy the truck with the bank loan, which costs about $5,800 less in present value than leasing, subject to the accountant's review of taxes. The owner should track the crew's monthly cash flow against the $26,000 annual assumption during the first year.
References
Brealey, R. A., Myers, S. C., & Allen, F. (2023). Principles of corporate finance (14th ed.). McGraw Hill.
Graham, J. R., & Harvey, C. R. (2001). The theory and practice of corporate finance: Evidence from the field. Journal of Financial Economics, 60(2-3), 187-243. https://doi.org/10.1016/S0304-405X(01)00044-7
Wisniewski, M., & Shafti, F. (2020). Quantitative analysis for decision makers (7th ed.). Pearson.
Reading the BUS 2100 Module 6 assignment instructions
The last BUS-2100 module project applies Module 6's financial mathematics, and the third proctored exam follows it. Expect problems involving interest, loan payments, present and future values, and investment appraisal with NPV, IRR and payback. Show each formula and name the spreadsheet function you used, such as PMT, PV, NPV or IRR, so the work can be checked. Keep time periods consistent, especially when converting annual rates to monthly ones. Separate the investment decision from the financing decision, state assumptions such as the cost of capital and resale values, test the key assumption, and end with a recommendation. Put the truck's cash flows into a year-by-year table first, then compute.
Inside the BUS 2100 Module 6 example
The project addresses three linked decisions in order, showing why the investment and financing questions are separate. The loan calculation gives the formula and the spreadsheet function, and the buy-or-lease comparison puts timing differences on a present-value basis in a table. The investment appraisal lays out cash flows with cumulative totals so payback can be read directly, then reports NPV and IRR with their meaning. A sensitivity section finds the break-even cash flow, which turns uncertainty into a number the owner can monitor. The recommendation states conditions, such as the tax review, rather than ignoring them. Read it for how each number feeds the final recommendation.
Where the marks sit in the BUS 2100 Module 6 rubric
The sixth project is marked from 0 to 100. Mentors check loan, present value, NPV, IRR and payback calculations, with attention to consistent periods and correct timing of payments. They reward clear separation of investment and financing decisions, stated assumptions and a sensitivity or break-even analysis. Tables with labeled years and cash flows make the work easy to verify. The advice to the owner should come from the NPV and IRR results and admit what the model ignores, taxes among them. Objective writing in the third person and correct citations complete the grade. Answers that report an NPV without interpreting it, or mix annual and monthly rates, usually lose points. Naming the spreadsheet functions used also helps mentors follow and verify the calculations.
BUS 2100 Module 6 help from the desk
Common mistakes include using an annual interest rate with monthly payments, treating lease payments made in advance as if paid at the end of each month, and mixing financing costs into project cash flows. Our writers can prepare BUS 2100 financial decision projects with your module's figures. Start by listing every cash flow with its date. Convert rates to match the payment period, then use PMT for loans and NPV or PV for comparisons, adding the initial outlay separately. Calculate IRR and payback as checks, test the most uncertain input, and write the recommendation with its conditions. Finally, check the signs of every cash flow before running the functions.
Write yours, or have the desk draft it
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BUS 2100 Module 6 questions, answered
Where can I find a free BUS 2100 Module 6 sample paper?
The sixth Quantitative Skills for Business module project appears above, with a truck loan, a buy-or-lease comparison and NPV, IRR and payback for a new landscaping crew.
Why compare buying and leasing in present value terms?
Because payments and resale values occur at different times, discounting puts them on a common basis so the cheaper option can be identified.
What is the difference between NPV and IRR?
NPV is the value added by a project at a given discount rate; IRR is the rate that would make that value exactly zero.
Should loan interest be included in a project's NPV?
No; the investment decision uses the project's own cash flows, and financing is evaluated separately.
What does a break-even analysis show?
How far an uncertain input, such as annual cash flow, could fall before the decision would change.