Assume that Penguin Co is considering disposing of equipment that cost $50,000 and has $40,000 of accumulated depreciation to date. Penguin Co can sell the equipment through a broker for $25,000 less 5% commission. Alternatively, Teal Co has offered to lease the equipment for five years for a total of $48,750. Penguin will incur repair, insurance, and property tax expenses estimated at $10,000
At lease-end, the equipment is expected to have no residual value. The net differential income from the lease alternative is:
A) $15,000
B) $ 5,000
C) $25,000
D) $12,500
A
Business
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