Z1 Limited wants to expand operations across provinces. To open a new branch in the Free State, equipmentof R675 000 should be purchased. Z1 Limited can either commit to a five-year loan at an interest rate of 10%or can enter into a finance lease with Efficient Operations to obtain the new equipment required for its branch.Finance lease payments of R140 000 per year, payable in arrears, will need to be made for a period of fiveyears if the asset is leased.If Z1 Limited decides to purchase the equipment, it will qualify for a wear-and-tear allowance of 25% per yearon the straight-line method of depreciation. The estimated residual valued of the asset at the end of the fiveyears is 10% of the original cost.Under either option, Z1 Limited will be responsible for maintaining the equipment at a cost of R50 000 peryear, from year two. The current tax rate is 27% and is payable in the year in which it is incurred. SARSallows interest, lease and maintenance costs to be deducted for tax purposes.Required:Assess whether Z1 Limited should take out a loan to finance the equipment or should consider a financeleased asset contractual obligation. The assessment should include the amortization table calculations andtax calculations. Rounding should be to two decimal places.