Sure-Bilt Construction Company is considering selling excess machinery with a book value of $281,400 (original cost of $400,900 less accumulated depreciation of $119,500) for $275,200, less a 5% brokerage commission. Alternatively, the machinery can be leased to another company for a total of $286,100 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 $26,400.
Sure-Bilt Construction Company is considering selling excess machinery with a book value of $281,400 (original cost of $400,900 less accumulated depreciation of $119,500) for $275,200, less a 5% brokerage commission. Alternatively, the machinery can be leased to another company for a total of $286,100 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 $26,400.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Which has high income , Lease or buy?
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Transcribed Image Text:Sure-Bilt Construction Company is considering selling excess machinery with a book value of $281,400 (original cost of
$400,900 less accumulated depreciation of $119,500) for $275,200, less a 5% brokerage commission. Alternatively, the
machinery can be leased to another company for a total of $286,100 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 $26,400.
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