Differential Analysis for a Lease or Sell Decision

Burlington Construction Company is considering selling excess machinery with a book value of $$281,700($original cost of $$399,700$

less accumulated depreciation of $$118,000)$ for $$276,300,$ less a $5\%$ brokerage commission. Alternatively, the machinery can be

leased for a total of $$286,400$ for five years, after which it is expected to have no residual value. During the period of the lease,

Burlington Construction Company's costs of repairs, insurance, and property tax expenses are expected to be $$25,300.$

a$.$ Prepare a differential analysis dated January $15$ to determine whether Burlington Construction Company should lease

$($Alternative $1)$ or sell $($Alternative $2)$ the machinery. If required, use a minus sign to indicate a loss.

Differential Analysis

Lease $($Alt$.1)$ or Sell $($Alt$.2)$ Machinery

January $15$

b$.$ On the basis of the data presented, would it be advisable to lease or sell the machinery?