Question 1 Mr Tee is the newly recruited financial analyst of Kelewele Ltd. He has been asked to analyze a proposal to acquire a drilling machine. He received the appropriation capital request. Kelewele Ltd can purchase the drilling machine for GH 100,000. Von Mining Company Lt. Kelewele Ltd can also lease the drilling machine for GH24,400 a year for a 5-year period from Frisky Ltd. The expected life of the machine is given as 5 years and expected to have a salvage value of GH10,000 in 5 years' time. The mining company intends to buy the drilling machine at a fair market value at that time. If the mining company decides to buy the machine, it can acquire financing at 20%. It will cost the Mining Company GH12,000 in maintenance and insurance of the drilling machine. The tax rate is 34%. Assume depreciation is on straight line basis and lease rentals are tax deductible. (Assume payment is made at the end of the year) a. Calculate NPV to Kelewele Ltd of the lea proposal 12 marks b. What advice will Mr Tee give to Kelewele Ltd? 3 marks c. Discuss five (5) features of a finance lease and explain their implications for the operations of firms. 10 marks TOTAL: 25 MARKS