Should you lease or buy equipment? When it comes to I.T. hardware such as desktop PCs, it makes sense to lease if you plan to hold onto equipment for only three years, according to Adam Braunstein, senior research analyst at Robert Frances Group, a Westport, Conn., consulting firm. It conducted a total-cost-of-ownership analysis showing that organizations tend to maximize the value of hardware in about three years. After that time, Braunstein says, the hardware generally starts to break down, leading to higher maintenance and repair costs.

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Furthermore, older machines might not be able to run new operating systems and applications. Other benefits to a three-year lease: avoiding large up-front capital expenditures. Still, leasing has its risks. For example, Braunstein notes that organizations that opt to lease and then decide to buy the hardware could end up spending more money than if they purchased it outright. Baseline, with help from Robert Frances Group, compares the cost of leasing or financing 5,000 PCs over three years in the tool below. To evaluate the impact of a different finance rate, see the online interactive tool.