Prepare a differential analysis on January

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Problem - Claxon Company owns a machine with a cost of $305,000 and accumulated depreciation of $65,000 that can be sold for $262,000, less a 5% sales commission. Alternatively, the machine can be leased by Claxon Company for three years for a total of $272,000, at the end of which there is no residual value. In addition, the repair, insurance, and property tax expense that would be incurred by Claxon Company on the machine would total $21,600 over the three years.

Required - Prepare a differential analysis on January 12 as to whether Claxon Company should lease (Alternative 1) or sell (Alternative 2) the machine.

Reference no: EM132767626

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