Lease or Sell

Bullwinkle Company owns equipment with a cost of $$363,000$ and accumulated depreciation of $$53,500$ that can be sold for $$277,100,$ less a $4\%$ sales commission. Alternatively, Bullwinkle Company can lease the equipment for three years for a total of $$288,100,$ at the end of which there is no residual value. In addition, the repair, insurance, and property tax expense that would be incurred by Bullwinkle Company on the equipment would total $$16,800$ over the three year lease.

a$.$ Prepare a differential analysis on August $7$ as to whether Bullwinkle Company should lease $($Alternative $1)$ or sell $($Alternative $2)$ the equipment. If required, use a minus sign to indicate a loss.

Differential Analysis

Lease Equipment $($Alt$.1)$ or Sell Equipment $($Alt$.2)$

August $7$

b$.$ Should Bullwinkle Company lease $($Alternative $1)$ or sell $($Alternative $2)$ the equipment?