1. 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 $3,040. The freight and installation costs for the equipment are $650. If purchased, annual repairs and maintenance are estimated to be $400 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

   	Lease Equipment (Alternative 1)	Buy Equipment (Alternative 2)	Differential Effects (Alternative 2)
   Unit costs:
   Purchase price	$fill in the blank b43757fc4fc004e_1	$fill in the blank b43757fc4fc004e_2	$fill in the blank b43757fc4fc004e_3
   Freight and installation	fill in the blank b43757fc4fc004e_4	fill in the blank b43757fc4fc004e_5	fill in the blank b43757fc4fc004e_6
   Repair and maintenance (4 years)	fill in the blank b43757fc4fc004e_7	fill in the blank b43757fc4fc004e_8	fill in the blank b43757fc4fc004e_9
   Lease (4 years)	fill in the blank b43757fc4fc004e_10	fill in the blank b43757fc4fc004e_11	fill in the blank b43757fc4fc004e_12
   Total unit costs	$fill in the blank b43757fc4fc004e_13	$fill in the blank b43757fc4fc004e_14	$fill in the blank b43757fc4fc004e_15

   Determine whether Urban Styles should lease (Alternative 1) or buy (Alternative 2) the equipment.

   Lease the equipmentBuy the equipment