Differential Analysis for a Lease or Sell Decision

Granite Construction Company is considering selling excess machinery with a book value of $$281,700($original cost of $$400,400$ less accumulated depreciation of

$$118,700)$ for $$277,500,$ less a $5\%$ brokerage commission. Alternatively, the machinery can be leased for a total of $$284,000$ for five years, after which it is expected t

have no residual value. During the period of the lease, Granite Construction Company's costs of repairs, insurance, and property tax expenses are expected to be

$$25,000.$

a$.$ Prepare a differential analysis, dated November $7$ to determine whether Granite should lease $($Alternative $1)$ or sell $($Alternative $2)$ the machinery.

Differential Analysis

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

November $7$