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Alert for not submit AI generated answer. I need unique and correct answer. Don't try to copy from anywhere. Do not give answer in image formet and hand writing Differential Analysis for a Lease-or-Buy Decision
Gilroy Corporation is considering new equipment. The equipment can be purchased from an overseas
supplier for $3,200. The freight and installation costs for the equipment are $650. If purchased, annual
repairs and maintenance are estimated to be $430 per year over the 4-year useful life of the equipment.
Alternatively, Gilroy can lease the equipment from a domestic supplier for $1,580 per year for 4 years,
with no additional costs.
Prepare a differential analysis dated December 11 to determine whether Gilroy should Lease Equipment
(Alternative 1) or Buy Equipment (Alternative 2). 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. If an amount
is zero, enter "0". For those boxes in which you must enter subtracted or negative numbers use a minus
sign.
Differential Analysis
Lease Equipment (Alt.1) or Buy Equipment (Alt.2)
December 11
Determine whether Gilroy should lease (Alternative 1) or buy (Alternative 2) the equipment.
Compare the lease costs for 4 years with the buying costs for 4 years (purchase price, freight, and
maintenance). Determine the differential effect on income of the revenues, costs, and income (loss)
by subtracting alternative 1 from alternative 2.
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