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QUESTION ONENyla Boilers is considering the acquisition of a new CNT machinefor their operations. Themachine may be purchased outright or leased.The Purchase OptionCash purchaseR600 000Annual softwareR10 000Maintenance CostsYear 1 and Year 2R5000 per yearYear 3R 9000Year 4R20 000The machine will be sold after 4 year for 15% of its cashpurchase price.The Leasing OptionAn initial deposit of R80 000 is required and the lease will runfor 4 years. Annual payments ofR120 000 need to be made at the end of each of the four years. Onexpiry of the 4th year thedeposit will be refunded. No other costs will be borne by NylaBoilers.The rate of return is 7%Tax rate: 30%Required:1.1 Determine the present value of cash flows associated with eachalternative. (22)1.2 Which option will you recommend to Nyla Boilers. (3)