Urban Styles Corporation is considering new equipment. The equipment can be purchased from an overseas supplier for $3,360. The freight and installation costs for the equipment are $650. If purchased, annual repairs and maintenance are estimated to be $420 per year over the 4-year useful life of the equipment. Alternatively, Urban Styles can lease the equipment from a domestic supplier for $1,500 per year for 4 years, with no additional costs.

Question Content Area

Prepare a differential analysis dated December 11 to determine whether Urban Styles should Lease Equipment (Alternative 1) or Buy Equipment (Alternative 2). 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". For those boxes in which you must enter subtracted or negative numbers use a minus sign.

	Lease Equipment (Alternative 1)	Buy Equipment (Alternative 2)	Differential Effects (Alternative 2)
Unit costs:
Purchase price	$fill in the blank 08ab5af97f98069_1	$fill in the blank 08ab5af97f98069_2	$fill in the blank 08ab5af97f98069_3
Freight and installation	fill in the blank 08ab5af97f98069_4	fill in the blank 08ab5af97f98069_5	fill in the blank 08ab5af97f98069_6
Repair and maintenance (4 years)	fill in the blank 08ab5af97f98069_7	fill in the blank 08ab5af97f98069_8	fill in the blank 08ab5af97f98069_9
Lease (4 years)	fill in the blank 08ab5af97f98069_10	fill in the blank 08ab5af97f98069_11	fill in the blank 08ab5af97f98069_12
Total unit costs	$fill in the blank 08ab5af97f98069_13	$fill in the blank 08ab5af97f98069_14	$fill in the blank 08ab5af97f98069_15

Question Content Area

Determine whether Urban Styles should lease (Alternative 1) or buy (Alternative 2) the equipment.

Lease the equipmentBuy the equipment