Pauls Delivery Service is considering selling one of its smaller trucks that is no longer needed in the business. The truck originally cost $23,000 and has accumulated depreciation of $10,000. The truck can be sold for $14,000. Another company is interested in leasing the truck. It will pay $4,800 per year for three years. Pauls Delivery Service will continue to pay the taxes and license fees for the truck, but all other expenses will be paid by the lessee. Management assumes the expenses for the taxes and license will be $300 per year.

1. Prepare a differential analysis report for the lease or sell decision.

2. On the basis of the data presented, would it be advisable to lease or sell the truck.