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131 S. Wheeling Rd.
Ph: 847-520-9758
Fx: 847-520-4652
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A Recently Financed Machine Makes the TMEF Case.

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Why the bottom line cost for capital equipment demands a thorough return on investment (ROI) analysis.
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How to maximize your chances for approval with the best terms.
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Company Information


Tristate Machinery
Equipment Financing
131 S. Wheeling Rd.
Wheeling, IL. 60090
Ph: (847) 520-9758
Fx: (847) 520-4652

Click to E-mail:
E-mail Us

Legal & Licensing

TMEF is a licensed
Illinois "S" Corporation

 

Why Return on Investment Really Matters

Itís easy to gauge how much money youíve made on an investment if you subtract the gain from the cost and divide it by the initial cost. Positive ROI means youíve made a good investment. The challenging part is just how to arrive at true ROI, the one that takes into account all aspects of the purchase, not just the initial purchase price. It's here where careful analysis of all aspects of the investment can make a huge difference.

For example, consider the comparison of a relatively expensive high performance machine tool over a cheaper alternative. The better machine is desirable, but it's too expensive. But is it really? Without an in depth ROI analysis you can't really tell.

In comparing the two, first consider operating costs. How much better, faster, or higher quality is the high performance machine to the cheaper alternative one over it's expected life? Even minor improvements can add up to big dollars, shift after shift, for years on end. Does it take you into new markets? Is there far less scrap, downtime, maintenance cost, etc.? All of this has a dollar value (see below for our free download to determine that).

Next, consider valuation. Is the lesser priced machine likely to lose residual value faster than the higher performance machine? If so, it's true functional operating cost per year might actually meet or exceed the higher performance machine on a year by year basis. Consider an operating three year lease with the lesser machine residual percentage is half what the higher performance machine is:

Purchase Price Analysis /w Operating Lease

HI- Performance

Alternative

Original Price

 $      100,000.00  $       75,000.00

3 Yr. Operating Life

 $       40,000.00  $       45,000.00

Residual Value: 60% VS. 30%

 $       60,000.00  $       30,000.00

Price per operating Yr.

 $       13,333.33  $       15,000.00

Suddenly, even a quick  ROI can add up to a clearer picture of which way to go. Obviously, only an ROI with all your businesses' variables and the complete costs and residual values of the machines considered can lead to your true return on investment.

To that end, we have included two free ROI Calculators.

Tristate Machinery Complementary Return on Investment Calculators

 Single machine ROI calculator

Three machine side-by-side
comparison ROI calculator


(Click to Download)
Clicak to Download
(Click to Download)
This spreadsheet is great single machine analyzer with 7 simple inputs. Calculates parts output, profit per part, breakeven point, and profit after equipment payback. Good look at the ROI picture over the machine lifecycle. This spreadsheet analyzes your current process vs. the Tristate offering, vs. a competitor under consideration. It outputs profits generated over 1-3-5 years, and analyzes the investments for total cost and payback period. Surprising!

 

For quotes on operating leases, their residual values, and help with a detailed ROI analysis of your next capital equipment purchase, send an E-mail , or call us directly at (847) 520-9758.

  

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