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Find which option is more suitable for the company

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Casso limited has an option to purchase new car for the use froma bank on loan for Rs. 100,000 with 16% interest payable annually and the principal is repayable in full at the end of 4 years.Alternatively, the car could be leased for 4 years, with thefollowing terms:

• Down payment Rs. 22,000

• Four annual payments Rs. 25,000

• Fair value of the asset Rs. 100,000

• Implicit rate of interest 10%

• Rental is to be paid at the beginning of the year.

Required:

Find which option is more suitable for the company.

Reference no: EM13256674

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