stries is considering selling excess machinery with a book value -brokerage commission. Alternatively, the machinery can be le e period of the lease, Pike Industries' costs of repairs, insuranc are a differential analysis report for the lease or sell decision. PIKE INDUSTRIES Proposal to Lease or Sell Machinery Differential Analysis Report mtid revenue from alternatives: ntial cost of alternatives: 00 00
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- Burlington Construction Company is considering selling excess machinery with a book value of $280,500 (original cost of $398,800 less accumulated depreciation of $118,300) for $275,900, less a 5% brokerage commission. Alternatively, the machinery can be leased for a total of $283,200 for five years, after which it is expected to have no residual value. During the period of the lease, Burlington Construction Company's costs of repairs, insurance, and property tax expenses are expected to be $25,800. a. Prepare a differential analysis dated January 15 to determine whether Burlington Construction Company should lease (Alternative 1) or sell (Alternative 2) the machinery. If required, use a minus sign to indicate a loss. Differential AnalysisLease (Alt. 1) or Sell (Alt. 2) MachineryJanuary 15 LeaseMachinery(Alternative 1) SellMachinery(Alternative 2) DifferentialEffects(Alternative 2) Revenues $fill in the blank 0e8800fac01dfcd_1 $fill in the blank 0e8800fac01dfcd_2 $fill…Inman Construction Company is considering selling excess machinery with a book value of $279,300 (original cost of $400,900 less accumulated depreciation of $121,600) for $274,300, less a 5% brokerage commission. Alternatively, the machinery can be leased to another company for a total of $283,200 for five years, after which it is expected to have no residual value. During the period of the lease, Inman Construction Company's costs of repairs, insurance, and property tax expenses are expected to be $25,100. a. Prepare a differential analysis, dated May 25 to determine whether Inman should lease (Alternative 1) or sell (Alternative 2) the machinery. For those boxes in which you must enter subtracted or negative numbers use a minus sign. Differential Analysis Lease Machinery (Alt. 1) or Sell Machinery (Alt. 2) May 25 Differential Effect Sell Machinery (Alternative 2) Lease Machinery on Income (Alternative 2) (Alternative 1) Revenues Costs Income (Loss) Feedback T Check My Work Subtract…Inman Construction Company is considering selling excess machinery with a book value of $282,400 (original cost of $401,900 less accumulated depreciation of $119,500) for $277,700, less a 5% brokerage commission. Alternatively, the machinery can be leased to another company for a total of $287,100 for five years, after which it is expected to have no residual value. During the period of the lease, Inman Construction Company's costs of repairs, insurance, and property tax expenses are expected to be $25,800. a. Prepare a differential analysis, dated May 25 to determine whether Inman should lease (Alternative 1) or sell (Alternative 2) the machinery. For those boxes in which you must enter subtracted or negative numbers use a minus sign. Differential Analysis Lease Machinery (Alt. 1) or Sell Machinery (Alt. 2) May 25 Lease Machinery(Alternative 1) Sell Machinery(Alternative 2) Differential Effecton Income(Alternative 2) Revenues $fill in the blank 0e9403fe1fc606b_1…
- Sure-Bilt Construction Company is considering selling excess machinery with a book value of $278,400 (original cost of $398,100 less accumulated depreciation of $119,700) for $276,300, less a 5% brokerage commission. Alternatively, the machinery can be leased to another company for a total of $287,500 for five years, after which it is expected to have no residual value. During the period of the lease, Sure-Bilt Construction Company's costs of repairs, insurance, and property tax expenses are expected to be $25,900. a. Prepare a differential analysis, dated May 25 to determine whether Sure-Bilt should lease (Alternative 1) or sell (Alternative 2) the machinery. For those boxes in which you must enter subtracted or negative numbers use a minus sign. Differential Analysis Lease Machinery (Alt. 1) or Sell Machinery (Alt. 2) May 25 Lease Machinery(Alternative 1) Sell Machinery(Alternative 2) Differential Effecton Income(Alternative 2) Revenues $ $ $ Costs…Stowe Construction Company is considering selling excess machinery with a book value of $280,700 (original cost of $399,000 less accumulated depreciation of $118,300) for $277,900, less a 5% brokerage commission. Alternatively, the machinery can be leased for a total of $285,600 for 5 years, after which it is expected to have no residual value. During the period of the lease, Stowe Construction Company's costs of repairs, insurance, and property tax expenses are expected to be $24,500. a. Prepare a differential analysis dated March 21 to determine whether Stowe Construction Company should lease (Alternative 1) or sell (Alternative 2) the machinery. If required, use a minus sign to indicate a loss. Differential Analysis Lease (Alt. 1) or Sell (Alt. 2) Machinery March 21 Lease Sell Line Item Description Machinery Machinery Differential Effects (Alternative 1) (Alternative 2) (Alternative 2) < Revenues Costs Profit (loss) งStowe Construction Company is considering selling excess machinery with a book value of $281,500 (original cost of $400,300 less accumulated depreciation of $118,800) for $274,900, less a 5% brokerage commission. Alternatively, the machinery can be leased for a total of $285,500 for 5 years, after which it is expected to have no residual value. During the period of the lease, Stowe Construction Company's costs of repairs, insurance, and property tax expenses are expected to be $24,900. Question Content Area a. Prepare a differential analysis dated March 21 to determine whether Stowe Construction Company should lease (Alternative 1) or sell (Alternative 2) the machinery. If required, use a minus sign to indicate a loss. Differential AnalysisLease (Alt. 1) or Sell (Alt. 2) MachineryMarch 21 Line Item Description LeaseMachinery(Alternative 1) SellMachinery(Alternative 2) DifferentialEffects(Alternative 2) Revenues $Revenues $Revenues $Revenues Costs Costs Costs Costs…
- Beemer Construction Company is considering selling excess machinery with a bookvalue of $280,000 (original cost of $400,000 less accumulated depreciation of$120,000) for $221,000, less a 5% brokerage commission. Alternatively, the machinerycan be leased for a total of $216,000 for five years, after which it is expected to haveno residual value. During the period of the lease, Eclipse Construction Company'scosts of repairs, insurance, and property tax expenses are expected to be $14,200. Prepare and show in solution a differential analysis, dated April 16 to determinewhether Beemer should lease (Alternative 1) or sell (Alternative 2) the machineryCarolina Trucking Company (CTC) is evaluating a potential lease agreement on a truck that costs $40,000 and falls into the MACRS 3-year class. The applicable MACRS depreciation rates are 0.33, 0.45, 0.15, and 0.07. The loan rate would be 10 percent, if CTC decided to borrow money and buy the asset rather than lease it. The truck has a 4-year economic life, and its estimated residual value is $10,000. If CTC buys the truck, it would purchase a maintenance contract that costs $1,000 per year, payable at the end of each year. The lease terms, which include maintenance, call for a $10,000 lease payment at the beginning of each year. CTC’s tax rate is 40 percent. Should the firm lease or buy?Hull Manufacturing Co. must decide whether to purchase or lease a new piece of equipment. The equipment can be leased for $4,000 a year or purchased for $15,000. The lease includes maintenance and service. The salvage value of the equipment at the end of five years is $5,000. If the equipment is owned, service and maintenance charges (a tax-deductible cost) would be $900 a year. The firm can borrow the entire amount at a rate of 15% if they buy. The tax rate is 50%. Which method of financing would you choose? Use the following capital cost allowance amounts. Year Amount $4,500 3,150 2,205 1,543 1,081 2 3 4
- Contech (lessee) wishes to lease a printing press valued at $60,000 from Wrenn Capital (lessor) for a period of 4 years. Wrenn expects to depreciate the asset on a straight-line basis to a salvage value of $0. Actual salvage value is expected to be $8,000 at the end of 4 years. If Wrenn requires a 12% after-tax rate of return on the lease, what is the lessor's amount to be amortized? Assume Wrenn's marginal tax rate is 40%. $60,000 $38,725 $41,778 $36,690. The Randolph company has decided to acquire a new truck. One alternative is to lease the truck on a 4 year guideline contract for a lease payment of $10,000 per year, with payments to be made at the end of each year. The lease would include maintenance. Alternatively, the company could purchase the truck outright for $40,000 (depreciated under Straight Line Method), financing the purchase by a bank loan for the net purchase price and amortizing the loan over a 4-year period at an interest rate of 10% per year. Under the borrow to purchase arrangement, the company would have to maintain the truck at a cost of $1,000 per year, payable at year end. It has residual value of $10,000, which is the expected market value after 4 years, when the company plans to replace the truck irrespective of whether it leases or buys. The tax rate is 40%. So what is the company's PV cost of leasing? What is the company's PV cost of owning? Should the truck be leased or purchased?Riverside Inc. plans to purchase or lease $220,000 worth of new equipment. If purchased, the equipment will be depreciated on a straight-line basis over five years, after which it will be worthless. If leased, the annual lease payments will be $55,000 per year for five years. Assume Riverside’s borrowing cost is 8%, its tax rate is 35%, and the lease qualifies as a true tax lease. If Riverton purchases the equipment, what is the amount of the lease-equivalent loan? a. $292,884 b. $192,488 c. $197,358 d. $195,70 0 e. $190,237