Lease or Sell

Ferrigno Company owns equipment with a cost of $364,300 and accumulated depreciation of $52,200 that can be sold for $273,900, less a 3% sales commission. Alternatively, Ferrigno Company can lease the equipment to another company for three years for a total of $286,700, at the end of which there is no residual value. In addition, the repair, insurance, and property tax expense that would be incurred by Ferrigno Company on the equipment would total $15,800 over the three years.

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Prepare a differential analysis on March 23 as to whether Ferrigno Company should lease (Alternative 1) or sell (Alternative 2) the equipment. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

Differential Analysis Lease Equipment (Alt. 1) or Sell Equipment (Alt. 2) March 23

	Lease Equipment (Alternative 1)	Sell Equipment (Alternative 2)	Differential Effect (Alternative 2)
Revenues	$fill in the blank bcadad0e707e052_1	$fill in the blank bcadad0e707e052_2	$fill in the blank bcadad0e707e052_3
Costs	fill in the blank bcadad0e707e052_4	fill in the blank bcadad0e707e052_5	fill in the blank bcadad0e707e052_6
Profit (loss)	$fill in the blank bcadad0e707e052_7	$fill in the blank bcadad0e707e052_8	$fill in the blank bcadad0e707e052_9

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Should Ferrigno Company lease (Alternative 1) or sell (Alternative 2) the equipment?

Lease the equipmentSell the equipment