You have been asked to assess whether your employer should buy or lease new equipment. If the company buys the equipment it will need to borrow $150,000. The loan payment would be an interest only payment with an interest rate of 15%. The term of the loan will be 5 years which would be equal to the estimated useful life of the equipment. The equipment is estimated to have a salvage value of $15,000. Annual maintenance costs for the purchased equipment are estimated to be $10,000. If your employer leases the equipment it will cost $47,500 per annum and the leasing company will pay all maintenance costs. Assuming an income tax rate of 10%, which would you recommend? Buy or lease? Show all of your work. (20 Marks) 1 2 20.00% 33.33% Estimated Depreciation Rates 3 19.00% 4 5 12.00% 11.00%