Prepare differential analysis

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Reference no: EM131914199

McFadden Company owns equipment with a cost of $475,000 and accumulated depreciation of $280,000 that can be sold for $175,000, less a 7% sales commission. Alternatively, McFadden Company can lease the equipment for four years for a total of $180,000, at the end of which there is no residual value.

In addition, the repair, insurance, and property tax expense that would be incurred by McFadden Company on the equipment would total $35,500 over the four-year lease.

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

Reference no: EM131914199

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