Case Study 2 (30 marks) A Computer Systems company is considering replacing its current computer system and network with a new integrated and wireless system at a cost of R350 000 and the system is expected to have an effective life of 4 years. The residual value is expected to be 20% of cost. In terms of SARS guidelines the company will be able to depreciate the new system on a straight-line basis over its effective life. Maintenance costs and insurance which are estimated to be R12 200 per year will be paid by the lessor if the company uses lease financing. The lease option will involve annual payments of R78 000, payable at the beginning of each year (four payments). The company's bank is prepared to offer a loan for the full amount at an interest rate of 9.722% per year, payable in arrears. The company tax rate is 28% and the company's cost of capital is 11%. Required: 1. What is the net advantage of leasing? Determine whether the company should lease or borrow and purchase the system. (30 Marks)