Differential Analysis for a Lease$-$or$-$Buy Decision

Urban Styles Corporation is considering new equipment. The equipment can be purchased from an overseas supplier for $$3,400.$ The freight and installation costs for the

equipment are $$650.$ If purchased, annual repairs and maintenance are estimated to be $$380$ per year over the $4-$year useful life of the equipment. Alternatively, Urban

Styles can lease the equipment from a domestic supplier for $$1,480$ per year for $4$ years, with no additional costs.

Prepare a differential analysis dated December $11$ to determine whether Urban Styles 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 Urban Styles should lease $($Alternative $1)$ or buy $($Alternative $2)$ the equipment.