(Solved): Differential Analysis for a Lease or Buy Decision Laredo Corporation is considering new equipment. T ...

Differential Analysis for a Lease or Buy Decision Laredo Corporation is considering new equipment. The equipment can be purchased from an overseas supplier for \$3,040. The freight and installation costs for the equipment are \$620. If purchased, annual repairs and maintenance are estimated to be \$420 per year over the four-year useful life of the equipment. Alternatively, Laredo Corporation can lease the equipment from a domestic supplier for \$1,380 per year for four years, with no additional costs. Question Content Area Prepare a differential analysis dated March 15 to determine whether Laredo Corporation should lease (Alternative 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 "0". Differential Analysis Lease (Alt. 1) or Buy (Alt. 2) Equipment March 15 Lease Equipment (Alternative 1) Buy Equipment (Alternative 2) Differential Effects (Alternative 2) Costs: Purchase price \$fill in the blank 42e4f3f7cfe2f8f_1 \$fill in the blank 42e4f3f7cfe2f8f_2 \$fill in the blank 42e4f3f7cfe2f8f_3 Freight and installation fill in the blank 42e4f3f7cfe2f8f_4 fill in the blank 42e4f3f7cfe2f8f_5 fill in the blank 42e4f3f7cfe2f8f_6 Repair and maintenance (4 years) fill in the blank 42e4f3f7cfe2f8f_7 fill in the blank 42e4f3f7cfe2f8f_8 fill in the blank 42e4f3f7cfe2f8f_9 Lease (4 years) fill in the blank 42e4f3f7cfe2f8f_10 fill in the blank 42e4f3f7cfe2f8f_11 fill in the blank 42e4f3f7cfe2f8f_12 Total costs \$fill in the blank 42e4f3f7cfe2f8f_13 \$fill in the blank 42e4f3f7cfe2f8f_14 \$fill in the blank 42e4f3f7cfe2f8f_15 Question Content Area Determine whether Laredo should lease (Alternative 1) or buy (Alternative 2) the equip Machine Replacement Decision A company is considering replacing an old piece of machinery, which cost \$600,600 and has \$350,600 of accumulated depreciation to date, with a new machine that has a purchase price of \$485,900. The old machine could be sold for \$63,800. The annual variable production costs associated with the old machine are estimated to be \$158,400 per year for eight years. The annual variable production costs for the new machine are estimated to be \$99,100 per year for eight years. Question Content Area a.1 Prepare a differential analysis dated May 29 to determine whether to continue with (Alternative 1) or replace (Alternative 2) the old machine. If an amount is zero, enter "0". If required, use a minus sign to indicate a loss. Differential Analysis Continue with Old Machine (Alt. 1) or Replace Old Machine (Alt. 2) May 29 Continue with Old Machine (Alternative 1) Replace Old Machine (Alternative 2) Differential Effects (Alternative 2) Revenues: Proceeds from sale of old machine \$fill in the blank fa290cfac011fcf_1 \$fill in the blank fa290cfac011fcf_2 \$fill in the blank fa290cfac011fcf_3 Costs: Purchase price fill in the blank fa290cfac011fcf_4 fill in the blank fa290cfac011fcf_5 fill in the blank fa290cfac011fcf_6 Variable productions costs (8 years) fill in the blank fa290cfac011fcf_7 fill in the blank fa290cfac011fcf_8 fill in the blank fa290cfac011fcf_9 Profit (Loss) \$fill in the blank fa290cfac011fcf_10 \$fill in the blank fa290cfac011fcf_11 \$fill in the blank fa290cfac011fcf_12 Question Content Area a.2 Determine whether to continue with (Alternative 1) or replace (Alternative 2) the old machine. Question Content Area b. What is the sunk cost in this situation? The sunk cost is \$fill in the blank f011e4081fcdf99_1.ment.

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