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Situation 3: Peace Transportation Company has a truck that it no longer needs. The truck can be sold for $18,000 or it can be leased
Situation 3: Peace Transportation Company has a truck that it no longer needs. The truck can be sold for $18,000 or it can be leased for a period of 5 years at $4,000 per year. At the end of the lease, the truck is expected to have no salvage value. The truck cost $50,000 four (4) years ago, and $35,000 depreciation has been taken on it to date. To be sold for $18,000, the truck must first be repainted at a cost of $900. If the truck is to be leased for the 5-year period, Peace must provide the licenses, which cost $220 per year. The lessee must provide insurance at an annual cost of $200, tires at an estimated annual cost of $600, and repairs that are expected to amount to $2,000 during the 5-year period. Prepare a differential analysis report for the lease or sell decision. On the basis of the data presented, would it be advisable for Peace Transportation to lease or sell the truck
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