Keating Co. is considering disposing of equipment with a cost of $73,000 and accumulated depreciation of $51,100. Keating Co. can sell the equipment through a broker for $32,000 less 10% commission. Alternatively, Gunner Co. has offered to lease the equipment for five years for a total of $49,000. Keating will incur repair, insurance, and property tax expenses estimated at $10,000 over the five-year period. At lease-end, the equipment is expected to have no residual value. The net differential income from the lease alternative is $7,140 $15,300 $12,240 $10,200
Keating Co. is considering disposing of equipment with a cost of $73,000 and accumulated depreciation of $51,100. Keating Co. can sell the equipment through a broker for $32,000 less 10% commission. Alternatively, Gunner Co. has offered to lease the equipment for five years for a total of $49,000. Keating will incur repair, insurance, and property tax expenses estimated at $10,000 over the five-year period. At lease-end, the equipment is expected to have no residual value. The net differential income from the lease alternative is $7,140 $15,300 $12,240 $10,200
Chapter19: Lease And Intermediate-term Financing
Section: Chapter Questions
Problem 2P
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Keating Co. is considering disposing of equipment with a cost of $73,000 and accumulated depreciation of $51,100. Keating Co. can sell the equipment through a broker for $32,000 less 10% commission. Alternatively, Gunner Co. has offered to lease the equipment for five years for a total of $49,000. Keating will incur repair, insurance, and property tax expenses estimated at $10,000 over the five-year period. At lease-end, the equipment is expected to have no residual value. The net differential income from the lease alternative is
$7,140
$15,300
$12,240
$10,200
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