Differential analysis for a lease or buy decision OBJ. 1 Carr Corporation is considering new equipment. The equipment can be purchased from an overseas supplier for $3,900. The freight and installation costs for the equipment are $515.

If purchased, annual repairs and maintenance are estimated to be $410 per year over the four-year useful life of the equipment. Alternatively, Carr can lease the equipment from a domestic supplier for $1,750 per year for four years, with no additional costs. Prepare a differential analysis dated August 4 to determine whether Carr should lease (Alternative 1)

or purchase (Alternative 2) the equipment. Hint: This is a “lease or buy” decision, which must be analyzed from the perspective of the equipment user, as opposed to the equipment owner.