Lihue Lei Inc. is replacing one of its old machines and is conducting a lease or sell differential analysis. Lihue can lease out the old machine for $200,000. Costs of leasing the machine are Estimated Repair Expense of $67,000, Estimated Insurance Expense of $43,000, and Estimated Property Tax Expense of $7,800. The salvage value of the machinery after the lease will be $0.00. Lihue can sell the machine for $94,000 minus a commission of 7%.

Should Lihue lease or sell this machine, and why?

Answer rating: 100% (QA)

To determine whether Lihue Lei Inc should lease or sell the machine we need to compare the costs and ... View the full answer