Hello, I need help solving this accounting problem. You were appointed the manager of Drive Systems Division (DSD) at Tunes2Go, a manufacturer of portable musicdevices using the latest developments in hard drive technology, on December 15 last year. DSD manufactures the driveassembly, M-24, for the company's most popular product. Your bonus is determined as a percentage of your division'soperating profits before taxes.One of your first major investment decisions was to invest $6.1 million in automated testing equipment for the M-24. Theequipment was installed and in operation on January 1 of this year.This morning, J. Bradley Finch III, the assistant manager of the division (and, not coincidentally, the grandson of thecompany founder and son of the current CEO) told you about an offer by Pan-Pacific Electronics. Pan-Pacific wants torent to DSD a new testing machine that could be installed on December 31 (only two weeks from now) for an annualrental charge of $1,430,000. The new equipment would enable you to increase your division's annual revenue by 6percent. This new, more efficient machine would also decrease fixed cash expenditures by 6 percent.Without the new machine, operating revenues and costs for the year are estimated to be as follows. Sales revenue andfixed and variable operating costs are all cash.Sales revenue$9,260,000Variable1,240,000operating costsFixed operating4,650,000costsEquipmentdepreciationOther860,000780,000depreciationIf you rent the new testing equipment, DSD will have to write off the cost of the automated testing equipment this yearbecause it has no salvage value. Equipment depreciation shown in the income statement is for this automated testingequipment. Equipment losses are included in the bonus and operating profit computation.Because the new machine will be installed on a company holiday, there will be no effect on operations from thechangeover. Ignore any possible tax effects. Assume that the data given in your expected income statement are theactual amounts for this year and next year if the current equipment is kept.Required:a. Assume the new testing equipment is rented and installed on December 31. What will be the impact on this year'sdivisional operating profit?b. Assume the new testing equipment is rented and installed on December 31. What will be the impact on next year'sdivisional operating profit?c. Would you rent the new equipment?Complete this question by entering your answers in the tabs below.Required Required RequiredAAssume the new testing equipment is rented and installed on December 31. What will bethe impact on this year's divisional operating profit? (Enter your answers in dollars and notin millions (i.e., 2.34 million should be entered as 2,340,000). Operating loss amountsshould be indicated with a minus sign.)Baseline(StatusQuo)RentDifferenceEquipmentSales revenueOperating costs:VariableFixed (cash expenditures)Equipment depreciationOther depreciationLoss from equipment write-offOperating profit (loss) before taxes You were appointed the manager of Drive Systems Division (DSD) at Tunes2Go, a manufacturer of portable musicdevices using the latest developments in hard drive technology, on December 15 last year. DSD manufactures the driveassembly, M-24, for the company's most popular product. Your bonus is determined as a percentage of your division'soperating profits before taxes.One of your first major investment decisions was to invest $6.1 million in automated testing equipment for the M-24. Theequipment was installed and in operation on January 1 of this year.This morning, J. Bradley Finch II, the assistant manager of the division (and, not coincidentally, the grandson of thecompany founder and son of the current CEO) told you about an offer by Pan-Pacific Electronics. Pan-Pacific wants torent to DSD a new testing machine that could be installed on December 31 (only two weeks from now) for an annualrental charge of $1,430,000. The new equipment would enable you to increase your division's annual revenue by 6percent. This new, more efficient machine would also decrease fixed cash expenditures by 6 percent.Without the new machine, operating revenues and costs for the year are estimated to be as follows. Sales revenue andfixed and variable operating costs are all cash.Sales revenue$9,260,000Variable1,240,000operating costsFixed operatingcotsEquipmentdepreciationOther4,650,000860,000780,000depreciationIf you rent the new testing equipment, DSD will have to write off the cost of the automated testing equipment this yearbecause it has no salvage value. Equipment depreciation shown in the income statement is for this automated testingequipment. Equipment losses are included in the bonus and operating profit computation.Because the new machine will be installed on a company holiday, there will be no effect on operations from thechangeover. Ignore any possible tax effects. Assume that the data given in your expected income statement are theactual amounts for this year and next year if the current equipment is kept.Required:a. Assume the new testing equipment is rented and installed on December 31. What will be the impact on this year'sdivisional operating profit?b. Assume the new testing equipment is rented and installed on December 31. What will be the impact on next year'sdivisional operating profit?c. Would you rent the new equipment?Complete this question by entering your answers in the tabs below.Required Required RequiredAВAssume the new testing equipment is rented and installed on December 31. What will bethe impact on next year's divisional operating profit? (Enter your answers in dollars andnot in millions (i.e., 2.34 million should be entered as 2,340,000).)Show less ABaseline(StatusQuo)RentDifferenceEquipmentSales revenueOperating costs:Equipment rentalVariableFixed cash expendituresEquipment depreciationOther depreciationOperating profit (loss) before taxes

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In exchange for one or more payments, a lessor agrees to grant a lessee authority over the use of…