$1.$ Sell or Lease Equipment:

Bay Co$.$ is considering selling one of its machines that is no longer needed in the business. The machine originally cost $$150,000$ and has accumulated depreciation of $$135,000.$ The machine will sell for $$28,000.$ Another company is interested in leasing the equipment. It will pay $$7,200$ per year for five years. Bay Co$.$ will continue to pay the repair and maintenance expenses for the machine, but all other expenses are paid by the lessee. Bay Co$.$ assumes the expenses for the repairs and maintenance will be $$1,400$ per year. Bay Co$.$ would have a delivery cost if selling the machine for transportation of $$4,000.$

Differential Revenue from alternatives:

Revenue from LEASE:

Revenue from SALE:

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Sell machine $=$ $$28,000$

$$7,200$ x $5$ yr lease $=$ $$36,000$

Differential COST of alternatives:

Expenses from LEASE:

Expenses from SALE:

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