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5) ROT Ltd. is considering whether it should buy or lease equipment that costs 1.60 crores and has a post- tax salvage value of * 16 lakh at the end of its life of 5 years. A finance company, CBK Ltd. has offered to lease the equipment for 5 years at annual lease payments of 40 lakh at the beginning of each year. CBK Ltd. will also maintain the equipment which would otherwise cost ROT Ltd. * 2 lakh p.a. on an average. The owner of the equipment can claim depreciation on WDV basis at 25% each year. The company's tax rate is 30% and its cost of borrowing is 14.29% and the overall weighted average cost of capital is 15%. Should the company buy the asset or lease the equipment if the NPV of the equipment is - * 12 lakh (negative)? 14 UCC itd i concideringanroiect cartin1 crorobacting 10 voare Thir certaanbo 200 financed by 100/ 5) ROT Ltd. is considering whether it should buy or lease equipment that costs 1.60 crores and has a post- tax salvage value of * 16 lakh at the end of its life of 5 years. A finance company, CBK Ltd. has offered to lease the equipment for 5 years at annual lease payments of 40 lakh at the beginning of each year. CBK Ltd. will also maintain the equipment which would otherwise cost ROT Ltd. * 2 lakh p.a. on an average. The owner of the equipment can claim depreciation on WDV basis at 25% each year. The company's tax rate is 30% and its cost of borrowing is 14.29% and the overall weighted average cost of capital is 15%. Should the company buy the asset or lease the equipment if the NPV of the equipment is - * 12 lakh (negative)? 14 UCC itd i concideringanroiect cartin1 crorobacting 10 voare Thir certaanbo 200 financed by 100/

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