Question
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 $3,000. The
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 $3,000. The freight and installation costs for the equipment are $610. 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 $1,580 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 b1b6e500705206f_1 $fill in the blank b1b6e500705206f_2 $fill in the blank b1b6e500705206f_3 Freight and installation fill in the blank b1b6e500705206f_4 fill in the blank b1b6e500705206f_5 fill in the blank b1b6e500705206f_6 Repair and maintenance (4 years) fill in the blank b1b6e500705206f_7 fill in the blank b1b6e500705206f_8 fill in the blank b1b6e500705206f_9 Lease (4 years) fill in the blank b1b6e500705206f_10 fill in the blank b1b6e500705206f_11 fill in the blank b1b6e500705206f_12 Total unit costs $fill in the blank b1b6e500705206f_13 $fill in the blank b1b6e500705206f_14 $fill in the blank b1b6e500705206f_15 Determine whether Urban Styles should lease (Alternative 1) or buy (Alternative 2) the equipment.
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