Scenario 2

A contractor purchased an Eagle Crusher plant with a fair market value lease. The contractor established a covenant with the bank to carry the equipment off the balance sheet in order to secure financing and conserve his existing line of credit. This financing option allowed the contractor to get the equipment on-site and working while still maintaining a line of credit in case of emergency or unexpected expenses during the term of the lease. The profits earned with the crushing plant during the lease period allowed the contractor to pay the appraised value of the plant at lease end. This end-of-lease appraisal also helped the contractor determine the resale value of the equipment if he chose to resell it.