Question 1 A Plc is a construction company firm that has conducted an investment appraisal on a four-year project and has decided to proceed with the investment. The project involves the acquisition of plant and machinery that could be purchased for GH$280,000. The assets are expected to have a negligible residual value at the end of the project. Alternatively, the assets could be leased using a finance lease for GH$85,000 a year, payable in advance. Under such an arrangement the lessee would be responsible for all maintenance costs during the term of the lease. After the lease period expires, ownership of the assets would pass to the construction company. The implied interest and straight-line accounting depreciation will be tax allowable. The company is subject to tax at 25%, payable one year in arrears. Tax depreciation allowances are available to the purchaser of business assets at 25% a year on a reducing-balance basis. The company is able to borrow at an annual interest rate of 20%. Required: Determine whether it would be cheaper for the company to lease or buy the assets