Replace factory machinery with new equipment costing 2,000,000 which has a 20 year life. The Board are concerned about raising more debt at its 5.0% per annum cost, but the machinery supplier has offered to lease us the machinery for just 190,500 payable annually in advance for 15 years.

Establish if the lease really is more attractive than the 5% loan by extracting the interest rate implicit in the lease