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Winn Corporation has some equipment they are no longer planning on using. They are deciding between leasing the equipment to another company or just selling

Winn Corporation has some equipment they are no longer planning on using. They are deciding between leasing the equipment to another company or just selling it to a different company. The following information is available:

Original cost of equipment $250,000

Accumulated depreciation on equipment 100,000

Salvage value of asset 6,000

Selling price 90,000

Leasing Price per year 20,000

Annual expenses relating to leasing 7,500

Brokers commission on sale 15%

Life of lease 8 years

Required

  • Calculate the total net income if the asset is sold.
  • Calculate the total net income if the asset is leased.
  • What should the company do? Explain your answer.

Selling Asset

Leasing Asset

Total Revenue

Total Expenses

Net Income

What should the company do?

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