1. Laredo Corporation is considering new equipment. The equipment can be purchased from an overseas supplier for $3,240. The freight and installation costs for the equipment are $620. If purchased, annual repairs and maintenance are estimated to be $430 per year over the four-year useful life of the equipment. Alternatively, Laredo Corporation can lease the equipment from a domestic supplier for $1,540 per year for four years, with no additional costs.

   Prepare a differential analysis dated March 15 to determine whether Laredo Corporation should lease (Alternative 1) or purchase (Alternative 2) the equipment. (Hint: This is a lease or buy decision, which must be analyzed from the perspective of the equipment user, as opposed to the equipment owner.) If an amount is zero, enter "0".

   Differential Analysis
   Lease (Alt. 1) or Buy (Alt. 2) Equipment
   March 15
   	Lease Equipment (Alternative 1)	Buy Equipment (Alternative 2)	Differential Effects (Alternative 2)
   Costs:
   Purchase price	$fill in the blank 11b1d7fdaf95fab_1	$fill in the blank 11b1d7fdaf95fab_2	$fill in the blank 11b1d7fdaf95fab_3
   Freight and installation	fill in the blank 11b1d7fdaf95fab_4	fill in the blank 11b1d7fdaf95fab_5	fill in the blank 11b1d7fdaf95fab_6
   Repair and maintenance (4 years)	fill in the blank 11b1d7fdaf95fab_7	fill in the blank 11b1d7fdaf95fab_8	fill in the blank 11b1d7fdaf95fab_9
   Lease (4 years)	fill in the blank 11b1d7fdaf95fab_10	fill in the blank 11b1d7fdaf95fab_11	fill in the blank 11b1d7fdaf95fab_12
   Total costs	$fill in the blank 11b1d7fdaf95fab_13	$fill in the blank 11b1d7fdaf95fab_14	$fill in the blank 11b1d7fdaf95fab_15

   Determine whether Laredo should lease (Alternative 1) or buy (Alternative 2) the equipment.