C-DOT’s management is contemplating acquiring the equipment that manufactures printed circuit boards (PCBs) for Rs 24,00,000 whose economic life is expected to be 8 years. C-DOT Board is in a fix as...

C-DOT’s management is contemplating acquiring the equipment that manufactures printed circuit boards (PCBs) for Rs 24,00,000 whose economic life is expected to be 8 years. C-DOT Board is in a fix as to whether to get it financed with an 8-year term loan at the rate of 14 per cent, repayable in equal instalments of Rs 5,17,352 per year or by an equivalent amount of lease rent per year. The finance department of C-DOT has been called upon to give its judgement as to which alternative is better. Assume (a) there is no salvage value (b) straight line method of depreciation is used and allowed for tax purposes, and (c) corporate tax rate is 35 per cent. Which course of action should be preferred?