A nail manufacturing company is considering replacing its plant either by leasing or purchasing through a simple bank loan.Details are given below

Cost of Machine: P680,000

Tax rate: 30%

Cost of capital: 10%

Depreciation: 10% reducing balance;

LEASE DETAILS:

Annual Payment: P120,000 for 6 years

At the end of the 6^th year, an additional payment of P300,000 will have to be paid to transfer ownership to the Company.

LOAN DETAILS

Annual payment: P156,133 for 6 years

Insurance payable at 3% of book value in advance

Required:

Should the company lease or purchase the plant? Use excel in answering the question