Kan ye West &Sons is a family owned partnership that is an Internet Service Provider (ISP).It is considering the installation of an advanced server. Because of the prospects of advancements in the computer technology, it is evaluating the acquisition by either purchasing it, or leasing it under a contract that includes a cancellation option. Information relevant to the company's two options is as follows: Purchase The purchase price of the server is $280,000, and the company will pay installation and setup charges of $20,000 to the vendor. The partnership depreciates the asset using diminishing value method of 25%. The Tax Authority depreciates the same asset at a rate of 20 per cent per annum on prime cost basis. The server's disposal value at the end of 5 years is estimated to be 545,000. Kanye West &Sons will have to enter into a maintenance contract to server the server at an annual cost of S7,000 payable at the end of each year. Lease There will be 5 annual lease payments on the operating lease of 580,000, payable at the beginning of each year. The lease can be cancelled by Kanye West &Sons at any time without attracting any penalty. Under the operating lease, the lessor will bear the cost of servicing the server. The partners all have a marginal tax rate of 47 percent. The corporate tax rate is 30 percent. The required rate of return on the investment is 20 percent per annum. If purchased, Kanye West &Sons will finance the acquisition of the server with a loan at a before-tax interest rate of 10 percent per annum. Should the partnership purchase or lease the server? Show all calculations and the cash flow time lines for both the options. (Round off all figures to the nearest dollar)