A firm has to acquire a machine that will last for 4 years. Its purchase price is Rs 50,000 with no salvage value. A straight-line method of depreciation is followed. Tax rate is 30%. If the firm...

A firm has to acquire a machine that will last for 4 years. Its purchase price is Rs 50,000 with no salvage value. A straight-line method of depreciation is followed. Tax rate is 30%. If the firm borrows to buy the machine, it has to pay 14% interest. If it goes for leasing the machine for a period of 4 years, annual rental will be Rs 15,000. Which of the two should be preferred?