Question
Dingo Trucking Co. is considering disposing of a truck (asset). Dingo can sell the truck through a broker for $62,000 less a 4% broker commission.
Dingo Trucking Co. is considering disposing of a truck (asset). Dingo can sell the truck through a broker for $62,000 less a 4% broker commission. Alternatively, Wombat Corp. has offered to lease the truck for seven years for a total of $70,000. If the truck is leased to Wombat, Dingo will incur maintenance, insurance, and license expenses estimated at $11,000 over the seven-year lease period. At lease-end, the truck is expected to have no residual value. Calculate the increase or decrease in net income for 7 years if the truck is leased to Wombat rather than selling it.
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