1. ABM company requires the use of a two-year asset that costs R10,000. ABM can borrow R10,000 at an interest rate of 10%, with payments of R1,000 each year and a principal repayment of R10,000 at the end of year 2 . For simplicity, assume straightline depreciation of R5000 per year. The tax rate is 40%. If ABM leases the asset, the lease payment is R5,500 due at the end of each year. Should ABM lease the asset or borrow it? APPENDIX \begin{tabular}{|c|c|c|c|c|} \hline Rou & \begin{tabular}{l} preciatio \\ Percent \end{tabular} & \begin{tabular}{l} rcentage \\ by recove \end{tabular} & \begin{tabular}{l} Recover \\ year \end{tabular} & \\ \hline Recovery year & 3 years & 5 years & 7 years & 10 years \\ \hline 1 & 33.33% & 20.00% & 14% & 10% \\ \hline 2 & 44.45% & 32.00% & 25% & 18% \\ \hline 3 & 14.81% & 19.20% & 18% & 14% \\ \hline 4 & 7.41% & 11.52% & 12% & 12% \\ \hline 5 & & 11.52% & 9% & 9% \\ \hline 6 & & 5.76% & 9% & 8% \\ \hline 7 & & & 9% & 7% \\ \hline 8 & & & 4% & 6% \\ \hline 9 & & & & 6% \\ \hline 10 & & & & 6% \\ \hline 11 & & & & 4% \\ \hline Totals & 100% & 100% & 100% & 100% \\ \hline \end{tabular}