Vital Laundromats is considering the purchase or lease of a new washing machine for their Laundromat in Pinetown, KwaZulu-Natal, The Purchase Option The cost is R60 000. This amount will be paid in cash. It is estimated that this machine, due to a high level of atrition will only have a lifespan of 5 years, and will then be sold back to the seller at a residual value of R5 000. Depreciation is calculated on a straight line basis. There is an annual software update and it will cost, R9 000 pa. Maintenance costs are as follows: Year 1 and year 2: R2 000 per year Year 3: R3 500 Year 4 and 5: R5 000 per year The Leasing Option An initial deposit of 30% of the purchase price is required and the lease will run for 5 years. Annual payments of R12 500 need to be made at the end of each of the 5 years. On expiry of the 5th year, 20% of the deposit will be refunded. No other costs will be bome by Paradise Laundromats. Note: Their after tax cost of cost of capital is 10 % Their tax rate is 30%. Required: Determine the Net present value of cash flows associated with each alternative. Which option will you recommend to Paradise Laundromats