Question
Keating Co. is considering disposing of equipment with a cost of $69,000 and accumulated depreciation of $48,300. Keating Co. can sell the equipment through a
Keating Co. is considering disposing of equipment with a cost of $69,000 and accumulated depreciation of $48,300. Keating Co. can sell the equipment through a broker for $26,000, less a 9% broker commission. Alternatively, Gunner Co. has offered to lease the equipment for five years for a total of $45,000. Keating will incur repair, insurance, and property tax expenses estimated at $11,000 over the five-year period. At lease-end, the equipment is expected to have no residual value. The net differential income from the lease alternative is a. $7,238 b. $15,510 c. $10,340 d. $12,408
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