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Jefferson Company owns equipment with a cost of $95,000 and accumulated depreciation of $60,000 that can be sold for $40,000, less a 6% sales commission.
Jefferson Company owns equipment with a cost of $95,000 and accumulated depreciation of $60,000 that can be sold for $40,000, less a 6% sales commission. Alternatively, the equipment can be leased by Jefferson Company for five years for a total of $42,000, at the end of which there is no residual value. In addition, repair, insurance, and property tax that would be incurred by Jefferson Company on the equipment would total $7,000 over the five years. Determine the differential income or loss from the lease alternative for Jefferson Company.
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