1. Question Content Area

   Differential Analysis for a Lease-or-Sell Decision

   Sure-Bilt Construction Company is considering selling excess machinery with a book value of $276,400 (original cost of $398,400 less accumulated depreciation of $122,000) for $277,100, less a 5% brokerage commission. Alternatively, the machinery can be leased to another company for a total of $283,500 for five years, after which it is expected to have no residual value. During the period of the lease, Sure-Bilt Construction Company's costs of repairs, insurance, and property tax expenses are expected to be $26,100.

   Question Content Area

   a. Prepare a differential analysis, dated May 25 to determine whether Sure-Bilt should lease (Alternative 1) or sell (Alternative 2) the machinery. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

   Differential Analysis Lease Machinery (Alt. 1) or Sell Machinery (Alt. 2) May 25

   	Lease Machinery (Alternative 1)	Sell Machinery (Alternative 2)	Differential Effects (Alternative 2)
   Revenues	$fill in the blank 494d56005f8cf99_1	$fill in the blank 494d56005f8cf99_2	$fill in the blank 494d56005f8cf99_3
   Costs	fill in the blank 494d56005f8cf99_4	fill in the blank 494d56005f8cf99_5	fill in the blank 494d56005f8cf99_6
   Profit (loss)	$fill in the blank 494d56005f8cf99_7	$fill in the blank 494d56005f8cf99_8	$fill in the blank 494d56005f8cf99_9

   Question Content Area

   b. On the basis of the data presented, would it be advisable to lease or sell the machinery? Explain.

   Lease the machinerySell the machinery

   The net

   gainloss

   from selling is $fill in the blank 75197708a074068_3.