Answered

Get the answers you need at Westonci.ca, where our expert community is dedicated to providing you with accurate information. Discover a wealth of knowledge from experts across different disciplines on our comprehensive Q&A platform. Get immediate and reliable solutions to your questions from a community of experienced professionals on our platform.

I've very confused on finding the lease equipment, buy equipment, and differential effects

Ive Very Confused On Finding The Lease Equipment Buy Equipment And Differential Effects class=

Sagot :

26uffikn

Costs for Each Alternative

1. Alternative 1: Lease Equipment

- Lease cost per year: $1,580

- Total lease cost over 4 years: \( 1,580 \times 4 = 6,320 \)

2. Alternative 2: Buy Equipment

- Purchase price: $3,220

- Freight and installation: $620

- Annual repairs and maintenance: $430 per year

- Total repairs and maintenance over 4 years: \( 430 \times 4 = 1,720 \)

- Total cost of buying over 4 years: \( 3,220 + 620 + 1,720 = 5,560 \)

Differential Analysis

- Purchase price

 - Lease: $0

 - Buy: $3,220

 - Differential effect: $3,220

- Freight and installation

 - Lease: $0

 - Buy: $620

 - Differential effect: $620

- Repairs and maintenance

 - Lease: $0

 - Buy: $1,720

 - Differential effect: $1,720

- Lease cost (4 years)

 - Lease: $6,320

 - Buy: $0

 - Differential effect: -$6,320

Total Costs

- Total cost for leasing: $6,320

- Total cost for buying: $5,560

- Differential effect (cost saving if buying): $760

Conclusion

Moffett Industries would save $760 over the 4-year period by purchasing the equipment rather than leasing it. Therefore, Moffett Industries should buy the equipment (Alternative 2).

Thank you for visiting. Our goal is to provide the most accurate answers for all your informational needs. Come back soon. Thanks for using our platform. We aim to provide accurate and up-to-date answers to all your queries. Come back soon. Thank you for trusting Westonci.ca. Don't forget to revisit us for more accurate and insightful answers.