4.5 Himalayan College needs a generator. It can either buy it for Rs 250,000 or lease it from the company. The lease and purchase terms are as follows: Leasing: Himalayan College lease under a five-year lease requiring annual end-of- year payments of Rs 62,000. Purchasing: The generator costs Rs 250,000 and will have a five-year life. The salvage value of generator is Rs 10,000. The investment tax credit is 10 percent. The annual maintenance expenses are Rs 1,000 per year (which has been included in lease rent under leasing alternative). The asset will be depreciated under straight line method for five years. The interest rate on bank loan is 10 percent. The firm is in the 40 percent tax bracket. What is the cost of leasing? a. What is the cost of owning? b. Should the college lease or purchase the generator? C. 4.5 Himalayan College needs a generator. It can either buy it for Rs 250,000 or lease it from the company. The lease and purchase terms are as follows: Leasing: Himalayan College lease under a five-year lease requiring annual end-of- year payments of Rs 62,000. Purchasing: The generator costs Rs 250,000 and will have a five-year life. The salvage value of generator is Rs 10,000. The investment tax credit is 10 percent. The annual maintenance expenses are Rs 1,000 per year (which has been included in lease rent under leasing alternative). The asset will be depreciated under straight line method for five years. The interest rate on bank loan is 10 percent. The firm is in the 40 percent tax bracket. What is the cost of leasing? a. What is the cost of owning? b. Should the college lease or purchase the generator? C