Izingubo Ltd (Question 14.6) can finance the machine with a loan at an after-tax cost of 11.16%, a market-related rate. The loan NPC is R2 959 187 and the lease NPC is R3 068 564. Which option should be chosen?

Question

Accepted Answer

The loan, because it has the lower net present cost

Answer

The lease, because it has the higher NPC

Answer

The lease, because Izingubo would not pay maintenance

Answer

Either option, as the difference is immaterial

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Izingubo Ltd (Question 14.6) can finance the machine with a loan at an after-tax...

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