Assume that Win Co. is considering disposing of equipment that cost $53,443.00 a

Question

Assume that Win Co. is considering disposing of equipment that cost $53,443.00 and has $37,410.10 of accumulated depreciation to date. Win Co. can sell the equipment through a broker for $33,893.00 less 9% commission. Alternatively, But Co. has offered to lease the equipment for five years for a total of $45,102.00. Win will incur repair, insurance, and property tax expenses estimated at $10,553.00. At lease-end, the equipment is expected to have no residual value. Determine the net differential income from the lease alternative

Select the correct answer.

$30,842.63 $18,516.10 $45,102.00 $3,706.37

Explanation / Answer

The net differential income from the lease alternative is $3706.37.

Differential Revenue from alternatives $ Revenue from Lease 45,102.00 Revenur from Sale 33,893.00 11,209.00 Differential Cost from alternatives Repairs, insurance, taxes 10,553.00 Commission expense on sale     3,050.37    7,502.63 Net differential income from the lease alternative    3,706.37

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