Laredo Corporation is considering new equipment. The equipment can be purchased from an overseas supplier for $$3,000.$ The freight and installation costs for the equipment are $$640.$ If purchased, annual repairs and maintenance are estimated to be $$430$ per year over the four$-$year useful life of the equipment. Alternatively, Laredo Corporation can lease the equipment from a domestic supplier for $$1,580$ per year for four years, with no additional costs.

Question Content Area

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 a$8$d$68$bfc$0069$fa$7\_1$

$fill in the blank a$8$d$68$bfc$0069$fa$7\_2$

$fill in the blank a$8$d$68$bfc$0069$fa$7\_3$

Freight and installation fill in the blank a$8$d$68$bfc$0069$fa$7\_4$

fill in the blank a$8$d$68$bfc$0069$fa$7\_5$

fill in the blank a$8$d$68$bfc$0069$fa$7\_6$

Repair and maintenance $(4$ years$)$ fill in the blank a$8$d$68$bfc$0069$fa$7\_7$

fill in the blank a$8$d$68$bfc$0069$fa$7\_8$

fill in the blank a$8$d$68$bfc$0069$fa$7\_9$

Lease $(4$ years$)$ fill in the blank a$8$d$68$bfc$0069$fa$7\_10$

fill in the blank a$8$d$68$bfc$0069$fa$7\_11$

fill in the blank a$8$d$68$bfc$0069$fa$7\_12$

Total costs $fill in the blank a$8$d$68$bfc$0069$fa$7\_13$

$fill in the blank a$8$d$68$bfc$0069$fa$7\_14$

$fill in the blank a$8$d$68$bfc$0069$fa$7\_15$

Question Content Area

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