1. Sell or Lease Equipment:

Lakeshore Inc. is considering selling one of its mixing machines that is no longer needed in the business. The machine originally cost $136,000 and has accumulated depreciation of $105,000. The machine will sell for $25,000. Another company is interested in leasing the equipment. It will pay $6,400 per year for five years. Lakeshore Inc. will continue to pay the repair and maintenance expenses for the machine, but all other expenses are paid by the lessee. Lakeshore Inc. assumes the expenses for the repairs and maintenance will be $1,600 per year. Lakeshore Inc. would have a delivery cost if selling the machine for transportation of $2,000.

Differential Revenue from alternatives:

Revenue from LEASE:

Revenue from SALE:

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Differential COST of alternatives:

Expenses from LEASE:

Expenses from SALE:

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Net differential income from the LEASE alternative

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