Max, IncCan Sell a Large Piece of Machinery for $90,000

Multiple Choice

Max, Inc.can sell a large piece of machinery for $90,000.The machinery originally cost $240,000 and has accumulated depreciation of $130,000.Max will have to pay a 5% sales commission on the sale.Rather than sell, Max is considering leasing the machine.It can be leased for 4 years for $24,000 per year.Max has estimated future operating expenses to be $3,000 per year, and Max will be responsible for those expenses.Which of the following options most accurately describes the analysis and decision for Max?

A) Lease - because differential revenues are $6,000 if Max leases rather than sells
B) Lease - because Max will lose $20,000 if it sells the equipment for less than its $110,000 book value
C) Sell - because differential income of selling rather than leasing is $6,000
D) Sell - because differential income is $1,500 if Max sells rather than leases