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African Journal of Economic Review

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Comparison of Cost of Purchase and Lease of Mine Equipment as a Strategy for Production of Run-Off Mine – a case study of Zibo Fm Quarry and Roadstone Quarry, Ondo state, Nigeria

Thomas Busuyi Afeni, Moshood Onifade, Amujo Kolade Sylvester

Abstract


This research compares the cost of purchasing mining equipment with the cost of leasing mining equipment for the production of run-off mines. To achieve this objective, questionnaires were given to the quarry managers and also personal visitations were made. The data/information acquired from the questionnaires and personal visitations were subjected to statistical analysis. The results show that the total revenue for lease and purchase of mine equipment in Zibo FM for ten years are ₦ 11,263,200,000 and ₦11,289,142,610, the total investment for lease and purchase are ₦ 2,280,031,600 and ₦ 1,149,871,600, while the payback periods for lease and purchase option is 3 months 2 days and 2 months 28 days. The net present value for lease and purchase are ₦4.493 109 and ₦ 4.478 109. The total revenue for lease and purchase of mine equipment in Roadstone Quarry for ten years are ₦ 2,026,200,000 and ₦ 2,042,917,220, the total investment for lease and purchase are ₦ 1,943,499,520 and ₦ 707,619,520, while the payback period considering lease and purchase option is 17 months 10 days and 14 months 22 days. The net present value for lease and purchase are ₦ 7.292 108 and ₦ 6.882 108.

Keywords: Lease, Net Present Value (NPV), Payback Period, Total Revenue, Total Investment, Salvage Value and Depreciation




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