Question

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Differential Analysis for a Lease or Buy Decision Gilroy Corporation is considering new equipment. The equipment can be purchased from an overseas are $620. If purchased, annual repairs and maintenance are estimated to equipment from a domestic supplier for $1,540 per year for four years, with no additional costs. ar $3,140. The freight and installation costs for the equipment r useful life of the equipment. Alternatively, Gilroy can lease the be $380 per year overthe fu·· Prepare a differential analysis dated December 11 to determine whether Gilroy should lease (Altermative 1) or purchase (Alternative 2) the equipment. (Hint: This is a lease- or-buy decision, which must be analyzed from the perspective of the equipment user, as opposed to the equipment owner.) If an amount is zero, enter zero "0 Differential Analysis Lease Machine (Alt. 1) or Buy Machine (AIt. 2) Differential Effect Lease Machine Buy Machineon Income Alternative 1) (Alternative 2) (Alternative 2) Revenues Costs: so $0 $0 Purchase price Freight and installation Repair and maintenance (4 years) Lease (4 years) 3,140 620 Income (Loss) Determine whether Gilroy should lease (Alternative 1) or buy (Alternative 2) the equipment.

Answer 1