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Farm Machinery
Machinery
The effects of the virus on machinery dealers.
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<blockquote data-quote="Clive" data-source="post: 6860857" data-attributes="member: 6"><p>an even wiser tale .................</p><p></p><p>3 years ago a man wanted a new rage rover for his family to do 20k miles a year in, the car was £100,000............ some may think that excessive and say why not buy a 10k old car but a new Range Rover was his choice and something he could afford though hard work and wise investments, The example below therefore compares buying vs hire of THAT car and not a pointless comparison of a 100k RR to a 10K used discovery etc !</p><p></p><p>He had cash so could have bought it outright but he also ran a business where his capital was earining him 15-20% on his money. Using than money in his business for the next few years could make him 15-20k a year (45-50k total) ......... “opportunity cost”: whilst keeping his 100K capital safe and not depreciating</p><p></p><p>BUT he could still buy it cash and do his 20k miles for 3 years - today that car would be worth 40k ....... pre C19, Today though who knows but I reckon 30K maybe ? So its cost him 60-70k depreciation to have use of that car for 3 years 60k miles. Plus services at £800 pa. road tax at £500 each year and a set of tyres or 2 so lest say another £4K. Total cost of ownership =. 65-75k !! .................. plus. The opportunity cost of that money ........ another 30-60k. ........ in effect its cost the thick end of 100k !!!</p><p></p><p></p><p>or he could have hired it for £1000 per month inc, tyres tax and service x3 years at £36000 total, next month he gives it back and doesn’t give a dam what it might be worth ! If he uses it for work as well he can even recover a % of the VAT he’s paid on his rent</p><p></p><p></p><p>Comparing like for like (ie not a old cheap car vs a new expensive one, can buying be better ?</p></blockquote><p></p>
[QUOTE="Clive, post: 6860857, member: 6"] an even wiser tale ................. 3 years ago a man wanted a new rage rover for his family to do 20k miles a year in, the car was £100,000............ some may think that excessive and say why not buy a 10k old car but a new Range Rover was his choice and something he could afford though hard work and wise investments, The example below therefore compares buying vs hire of THAT car and not a pointless comparison of a 100k RR to a 10K used discovery etc ! He had cash so could have bought it outright but he also ran a business where his capital was earining him 15-20% on his money. Using than money in his business for the next few years could make him 15-20k a year (45-50k total) ......... “opportunity cost”: whilst keeping his 100K capital safe and not depreciating BUT he could still buy it cash and do his 20k miles for 3 years - today that car would be worth 40k ....... pre C19, Today though who knows but I reckon 30K maybe ? So its cost him 60-70k depreciation to have use of that car for 3 years 60k miles. Plus services at £800 pa. road tax at £500 each year and a set of tyres or 2 so lest say another £4K. Total cost of ownership =. 65-75k !! .................. plus. The opportunity cost of that money ........ another 30-60k. ........ in effect its cost the thick end of 100k !!! or he could have hired it for £1000 per month inc, tyres tax and service x3 years at £36000 total, next month he gives it back and doesn’t give a dam what it might be worth ! If he uses it for work as well he can even recover a % of the VAT he’s paid on his rent Comparing like for like (ie not a old cheap car vs a new expensive one, can buying be better ? [/QUOTE]
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The effects of the virus on machinery dealers.
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