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1. Differential Analysis for a Lease-or-Sell Decision Sure-Bilt Construction Company is considering selling excess machinery with a book value of $279,000 (original cost of $400,200
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Differential Analysis for a Lease-or-Sell Decision Sure-Bilt Construction Company is considering selling excess machinery with a book value of $279,000 (original cost of $400,200 less accumulated depreciation of $121,200) for $276,900, less a 5% brokerage commission. Alternatively, the machinery can be leased to another company for a total of $285,000 for five years, after which it is expected to have no residual value. During the period of the lease, Sure-Bilt Construction Company's costs of repairs, insurance, and property tax expenses are expected to be $25,000. a. Prepare a differential analysis, dated May 25 to determine whether Sure-Bilt should lease (Alternative 1) or sell (Alternative 2) the machinery. For those boxes in which you must enter subtracted or negative numbers use a minus sign. Differential Analysis Lease Machinery (Alt. 1) or Sell Machinery (Alt. 2) May 25 Differential Effect Lease Machinery Sell Machinery (Alternative 1) (Alternative 2) on Income (Alternative 2) Revenues Costs Income (Loss) Feedback b. On the basis of the data presented, would it be advisable to lease or sell the machinery? Explain. Sell the machinery The net gain from selling is $Step by Step Solution
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