Lihue Lei Inc. is replacing one of its old machines and is conducting a lease or sell
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Question:
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?
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