Prepare a differential analysis on February

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Question - Astro Company owns equipment with a cost of $361,400 and accumulated depreciation of $54,800 that can be sold for $276,900, less a 4% sales commission. Alternatively, Astro Company can lease the equipment for three years for a total of $284,600, at the end of which there is no residual value. In addition, the repair, insurance, and property tax expense that would be incurred by Astro Company on the equipment would total $16,500 over the three year lease.

Required -

a. Prepare a differential analysis on February 18, as to whether Astro Company should lease (Alternative 1) or sell (Alternative 2) the equipment.

b. Should Astro Company lease (Alternative 1) or sell (Alternative 2) the equipment?

Reference no: EM133066560

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