Another question:

ALH requires a dump truck for six months and has asked you to evaluate a lease proposal that it has received from ABC Finance Limited as compared with outright purchase in the company's name.Information is provided as follows: ( i ) Outright purchase Cost $350,000. Insurance $7,500 per year payable in advance. A rebate of $2,500 will be paid by the insurance company on disposal of the dump truck at the end of the six months. Maintenance will cost $1,000 per month, at the end of each month. Depreciation will be charged to the accounts at 20% on Prime Cost. Estimated sale value at the end of the six months $200,000. ( ii ) Lease proposal Monthly payments, in advance, of $30,000. All costs other than fuel are payable by the lessor. Other information: Tax is payable at the end of the sixth month at 30%. Weighted Average Cost of Capital is 12% per annum. Fuel costs are common to both options. I. Calculate the Net Present Value of the Outright purchase option. II. Calculate the Net Present Value of the Lease proposal. In your report: I. Name the type of lease being offered. II. Make your recommendation as to whether or not to accept the lease proposal and why.