ch 25 1

Lease or Sell Ferrigno Company owns equipment with a cost of $362,700 and accumulated depreciation of $54,400 that can be sold for $274,900, less a 4% sales commission. Alternatively, Ferrigno Company can lease the equipment to another company for three years for a total of $285,500, at the end of which there is no residual value. In addition, the repair, insurance, and property tax expense that would be incurred by Ferrigno Company on the equipment would total $15,200 over the three years. Prepare a differential analysis on March 23 as to whether Ferrigno Company should lease (Alternative 1) or sell (Alternative 2) the equipment. For those boxes in which you must enter subtracted or negative numbers use a minus sign. Differential Analysis Lease Equipment (Alt. 1) or Sell Equipment (Alt. 2) March 23 Lease Sell Equipment Equipment (Alternative 1) (Alternative 2) Differential Effect (Alternative 2) Revenues $ Costs Profit (loss)