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Moffett Industries is considering new equipment. The equipment can be purchased from an overseas supplier for $3,220. The freight and installation costs for the
Moffett Industries is considering new equipment. The equipment can be purchased from an overseas supplier for $3,220. The freight and installation costs for the equipment are $630. If purchased, annual repairs and maintenance are estimated to be $390 per year over the 4-year useful life of the equipment. Alternatively, Moffett Industries can lease the equipment from a domestic supplier for $1,420 per year for 4 years, with no additional costs. a. Prepare a differential analysis dated February 12 to determine whether Moffett Industries 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".
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