Keating Co. is considering disposing of equipment with a cost of $79,000 and accumulated depreciation of $55,300. Keating Co. can sell the equipment through a broker for $32,000, less a 10% broker commission. Alternatively, Gunner Co. has offered to lease the equipment for five years for a total of $50,000. 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.$7,140

b.$15,300

c.$12,240

d.$10,200

Starling Co. is considering disposing of a machine with a book value of $24,400 and estimated remaining life of five years. The old machine can be sold for $5,000. A new high-speed machine can be purchased at a cost of $67,100. It will have a useful life of five years and no residual value. It is estimated that the annual variable manufacturing costs will be reduced from $23,500 to $20,300 if the new machine is purchased. The differential effect on income for the new machine for the entire five years is a(n)

a.increase of $46,100

b.decrease of $46,100

c.increase of $59,930

d.decrease of $59,930