Gilroy Corporation is considering new equipment. The equipment can be purchased from an overseas supplier for $3,240. The freight and installation costs for the equipment are $620. If purchased, annual repairs and maintenance are estimated to be $380 per year over the four-year useful life of the equipment. Alternatively, Gilroy can lease the equipment from a domestic supplier for $1,460 per year for four years, with no additional costs.
Prepare a differential analysis dated December 3 to determine whether Sloan should lease (Alternative 1) or purchase (Alternative 2) the equipment. Hint: This is a lease or buy" decision, which must be analyzed from the perspective of the equipment user, as opposed to the equipment owner. If an amount is zero, enter zero "o". Use a minus sign to indicate a loss.
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