Assume that Win Co. is considering disposing of equipment that cost $75,876.00 a

Question

Assume that Win Co. is considering disposing of equipment that cost $75,876.00 and has $53,113.20 of accumulated depreciation to date. Win Co. can sell the equipment through a broker for $34,817.00 less 6% commission. Alternatively, But Co. has offered to lease the equipment for five years for a total of $47,760.00. Win will incur repair, insurance, and property tax expenses estimated at $8,630.00. 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.

$16,367.20 $32,727.98 $47,760.00 $6,402.02

Explanation / Answer

Lease Equipment Sell Equipment Difference Revenue 47760 34817 12943 Costs -8630 -2089.02 -6540.98 Income(loss) 39130 32727.98 6402.02 Option 4 is correct

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