QUESTION $1(65$ marks$)$ Far Away Ltd $($Far Away$)$ is an outdoor gear manufacturer located in Rondebosch, Cape Town. The entity$$s financial year$-$end is $31$ July. Far Away sells tents, which were always purchased from an overseas supplier. However, the machinery required to produce similar high$-$quality tents has recently been made available for purchase in South Africa. Consequently, Far Away is considering purchasing the required machine $($Machine D$4$F$)$ on $1$ August $2025$ to manufacture the tents themselves. The supplier of Machine D$4$F is selling the machine for R$3210000.$ Alternatively, the machine can be leased from the supplier at R$267000,$ payable annually in advance. Should Far Away purchase the machine, the entity will qualify for a section $12$C Income tax deduction of $40\%$ in the first year and $20\%$ thereafter. Far Away will, however, not be able to finance the acquisition of Machine D$4$F from the entity$$s current funds and will have to obtain a $4-$year bank loan which will be payable in equal annual instalments in arrear at an interest rate of $7\mathrm{.}1\%$ compounded monthly. Additionally, Far Away will purchase a maintenance contract of R$86500$ annually, should they purchase the machine. Irrespective of whether Far Away purchases or leases Machine D$4$F$,$ it is estimated that Far Away will produce and sell $437000$ tents annually at R$36000$ each. Machine D$4$F has an expected useful life of $5$ years, whereafter, it will be sold for a scrap value of R$33000.$ Far Away has a weighted average cost of capital of $12\mathrm{.}6\%,$ which includes a beforetax cost of debt of $11\mathrm{.}9\%.$ The South African Income Tax rate for companies is $27\%.3$ HFMN$230-1\_$Jan$-$Jun$2025-$SA$1\_$V$3\_$ES$\_24012025$ REQUIRED: $1\mathrm{.}1.$ Perform a net present valuation to determine if the purchasing of the machine by taking out a bank loan will be profitable? $(44$ marks$)$ Communication skill: Presentation $(1$ mark$)1\mathrm{.}2.$ Perform the net present valuation on Far Away Ltd$.$s option to lease Machine D$4$F$.(18$ marks$)1\mathrm{.}3.$ Advise Far Away Ltd on whether the entity should pursue the loan option or the lease option. Motivate your answer. Round to two decimals where required. $(1$ mark$)$ Communication skill: Logical argument $(1$ mark$)$