Formal Report

Executive Summary
This report looks at obtaining a new fleet of vehicles for the sales team. It also examines the advantages and disadvantages of purchasing and leasing. The three options for vehicles are a 2016 Subaru Crosstrek, a 2016 Ford Explorer, and a 2016 Dodge Journey. The report will show the advantages and disadvantages of purchasing and leasing from an accounting and administrative perspective.
The three options for vehicles are similar in size, fuel economy, cost, and warranties. Any of them would work well for the sales team who individually drive on average 3,000 miles a year. It was necessary to choose vehicles that were large enough to hold all the sample cleaning supplies that the sales team carries.
There are many advantages and disadvantages to purchasing the vehicles. Some of the advantages include, negotiating price, tax deduction on depreciation, and ownership of the vehicles. Disadvantages of purchasing include investing in an asset that depreciates, higher down payment and monthly payment, and deciding what to do with the vehicles when they are no longer useful.
Leasing offers different advantages and disadvantages from purchasing. Advantages of leasing include preservation of operating capital, off balance sheet treatment, less administrative, lease payments are 100% tax deductible, and it allows the company to get new vehicles every few years. Disadvantages of leasing include no tax deduction for depreciation, no ownership of the vehicles, must follow rules of lease agreement, and termination fees for early termination of lease agreement.
Based on all the research, the Subaru Crosstrek is the best vehicle option for the sales team based on cost and fuel efficiency. The best course of action is to lease these vehicles as it allows the company to keep valuable operating capital that can be reinvested into future projects. Leasing is also cheaper and ensures that the vehicles that the sales teams are driving are always in good shape...