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10. Beta Ltd. is thinking of installing a computer. Decide whether the computer is to be purchased outright (through 15% borrowing) or to be acquired

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10. Beta Ltd. is thinking of installing a computer. Decide whether the computer is to be purchased outright (through 15% borrowing) or to be acquired on lease rental basis. The rate income tax may be taken at 40%. The other data available are as under : Purchase of computer : Purchase price Rs. 20 lakh, Annual maintenance (to be paid in advance) Rs. 50000 p.a, Expected economic useful life 6 years, Depreciation (for tax purposes) SLM Salvage value Rs.2 lakhs Leasing of computer : Lease charges to be paid in advance Rs. 4.50 lakhs Maintenance expenses to be borne by lessor. Payment of loan is made in 6 year-end installments of Rs. 5,28,474 each

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