Read the case given below and answer the questions given at the end.

CASE STUDY – 2

From the following information, you are required to advise a company about the leasing out of the assets:

Cost of the assets                                          Rs. 12,00,000/-
Average cost of capital to the lessor                         10%
Depreciation                                                  15% on original cost
Life                                                                           5 years
Salvage value                                                             50,000
Lease rent payable at the end of each of 5 years Rs.  4,50,000/-
Corporate tax                                                         50% applicable to lessor