Zayn Transporters has determined that a new specialised delivery truck needs to be purchased. The truck will generate a

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Zayn Transporters has determined that a new specialised deliverytruck needs to be purchased. The truck will generate a positive netpresent value NPV of R780 000, calculated using the company’s WACCof 19%. The truck can be leased from the manufacturer. The leaseagreement requires 5 annual end of year payments of R280 500 withannual maintenance cost amounting to R40 000. Alternatively, thetruck can be purchased at a cost of R1.25 million, inclusive of a5-year maintenance contract with the manufacturer. The truck can bedepreciated straight-line over the same period and will have azero-market value at the end of 5 years. Insurance costs areexpected to be R2 000 per month over the 5 years. You may assumethat the current corporate tax rate is 28% and the after-tax costof debt is 13%. Determine the after-tax cash flows and the netpresent value of the cash outflows under each alternative. 3.1 (23marks) 3.2 Briefly indicate which alternative should berecommended. (2 marks).