Answered

Welcome to Westonci.ca, the place where your questions find answers from a community of knowledgeable experts. Get immediate answers to your questions from a wide network of experienced professionals on our Q&A platform. Experience the ease of finding precise answers to your questions from a knowledgeable community of experts.

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).

We appreciate your visit. Our platform is always here to offer accurate and reliable answers. Return anytime. We hope our answers were useful. Return anytime for more information and answers to any other questions you have. Find reliable answers at Westonci.ca. Visit us again for the latest updates and expert advice.