QUESTION 3 (25 Marks) 3.1 Identify and explain FIVE (5) reasons in favour of leasing. (5 marks) 3.2 Differentiate between New Issues and Right Issues. (4 marks) 3.3 AVIS Limited has determined that a new specialised delivery truck needs to be purchased. The truck will generate a positive net present value of R480 000, calculated using the companys WACC of 20%. Lease Option: The truck can be leased from the manufacturer. The lease agreement requires 5 annual payments of R420 000, with the first payment due on the delivery of the vehicle. AVIS Limited would be liable for annual service costs of R50 000 for years 3 and 4 of the lease agreement. Purchase Option: The truck can also be purchased at a cost of R2 million. AVIS Limited will be acquiring the asset with cash. The truck can be depreciated straight-line over the four years and will have a zero-market value at the end of its useful life. Additional Information: After tax cost of debt is 12% Assume a current corporate tax rate of 30%. Required: Determine the after-tax cash flows and the net present value of the cash outflows under each alternative..