Differential Analysis for a Lease-or-sell Decision Stowe Construction Company is considering selling excess machinery with a book value of $277,500 (original cost of $398,900 less accumulated depreciation of $121,400) for $277,600, less a 5% brokerage commission. Alternatively, the machinery can be leased for a total of $283,800 for 5 years, after which it is expected to have no residual value. During the period of the lease, Stowe Construction Company's costs of repairs, insurance, and property tax expenses are expected to be $25,100. a. Prepare a differential analysis dated March 21 to determine whether Stowe 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 Line Item Description Revenues Costs Profit (loss) Feedback March 21 Sell Machinery Lease Machinery Differential Effects (Alternative 1) (Alternative 2) (Alternative 2) Check My Work Subtract the lease costs from the lease revenues. Subtract the sell machine costs from the sell machine revenue. Determine the differential effect on income of the revenues, costs, and income (loss) by subtracting alternative 1 from alternative 2. b. On the basis of the data presented, would it be advisable to lease or sell the machinery? Sell the machinery Differential Analysis for a Lease-or-sell Decision Stowe Construction Company is considering selling excess machinery with a book value of $277,500 (original cost of $398,900 less accumulated depreciation of $121,400) for $277,600, less a 5% brokerage commission. Alternatively, the machinery can be leased for a total of $283,800 for 5 years, after which it is expected to have no residual value. During the period of the lease, Stowe Construction Company's costs of repairs, insurance, and property tax expenses are expected to be $25,100. a. Prepare a differential analysis dated March 21 to determine whether Stowe 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 Line Item Description Revenues Costs Profit (loss) Feedback March 21 Sell Machinery Lease Machinery Differential Effects (Alternative 1) (Alternative 2) (Alternative 2) Check My Work Subtract the lease costs from the lease revenues. Subtract the sell machine costs from the sell machine revenue. Determine the differential effect on income of the revenues, costs, and income (loss) by subtracting alternative 1 from alternative 2. b. On the basis of the data presented, would it be advisable to lease or sell the machinery? Sell the machinery