Question
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 |
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|
What should the company do?
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