i. Your company wants to purchase a new network file server for its wide-area computer network. The server costs RM75,000. It will be completely obsolete in three years. Your options are to borrow the money at 10 percent or to lease the machine. If you lease, the payment will be RM27,000 per year, payable at the end of each of the next three years. If you buy the servers, you can depreciate it straightline to zero over three years. The tax rate is 34 percent. Should you lease or buy?

ii. In question i . what is the NPV of the lease to the lessor? At what lease payment will the lessee and the lessor both break-even?