ABSTRACT
Generally equipment is either purchased for permanent ownership or alternatively hired/leased for the required temporary period to meet peak demand or specialised duties. The specific decision to purchase will have important financial consequences for the firm, since considerable capital sums will be locked up in the item, which must then be operated at an economic utilisation level to produce a profitable rate of return on the investment. When examining the need to own equipment the following points must be considered:
1 Will the item generate sufficient turnover to provide an adequate rate of return on the capital employed?
