Differential Analysis for a Lease-or-Buy Decision Pompeo Corporation is considering new equipment. The equipment can be purchased from an overseas supplier for $95,000. The freight and installation costs for the equipment are $4,500. If purchased, annual repairs and maintenance are estimated to be $3,600 per year over the 4-year useful life of the equipment. Alternatively, Pompeo can lease the equipment from a domestic supplier for $29,200 per year for 4 years, with no additional costs. Prepare a differential analysis dated December 11 to determine whether Pompeo 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 Lease Equipment (Alternative 1) Buy Equipment (Alternative 2) Differential Effects (Alternative 2) Unit costs: Purchase price 0 95,000 X -95,000 Freight and installation 0 4,500 X -4,500 Repair and maintenance (4 years) 0 14,400 X -14,400 Lease (4 years) 116,800 X 0 116,800 Total unit costs 116,800 X 113,900 X 2,900 Feedback Check My Work 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.