Question 4 3 (14) Tasty Ltd is a manufacturer of fruit juices The management of the company has indicated that it wishes to obtain a new orange-juicing machine to expand its product line Tasty Ltd has the options to either borrow the money needed for the juicer and buy it or to lease the machine from the manufacturer The juicer will cost R10 000 000 and will be depreciated over four years by way of the straight-line method Financing for the machine can be obtained at an interest rate of 12% before tax with the principle sum being paid back at the end of the four-year loan period The juicer has a useful life of four years and will have no residual value Maintenance of the machine will amount to R1 000 000 per year which will be paid at the end of each year The option to lease will cost R3 700 000 per year (payable at the end of each year) for four years, after which the lessor will take ownership of the machine Maintenance is included in the cost of the lease Tasty Ltd is subject to a 30% tax rate REQUIRED Determine the net advantage to leasing (NAL) and comment on whether the company should borrow and purchase the machine or take up the lease offer from the manufacturer