Step 1: Find the Differential Revenue of Selling the Machine = Revenue from Selling $115,000 - Revenue from Leasing $175,000. $115,000 - $175,000 = ($60,000) Step 2: Determine Costs of Leasing Machine = Estimated Repair Expense of $23,000 + Estimated Insurance Expense of $9,000 + Estimated Property Tax Expense of $3,500. $23,000 + $9,000 + $3,500 = $35,500 Step 3: Compute the Costs of Selling Machine = Selling Price $115,000 x Commission Paid 5%. $115,000 x 5% = $5,750 Step 4: Find Differential Costs of Selling the Machine = Costs from Selling the Machine $5,750 - Costs from Leasing the Machine $35,500. $5,750 - $35,500 = ($29,750) Step 5: Calculate Differential Profit or Loss of Selling the Machine = Differential Revenue from Selling the Machine ($60,000) - Differential Costs of Selling the Machine ($29,750). ($60,000) - ($29,750) = ($30,250) This is the amount of loss Honolulu would incur if they sell the machine. Conversely, they would profit from this amount if they leased the machine.

Answer rating: 100% (QA)

Based on the calculations provided if Honolulu sells the machine th... View the full answer