A company is undertaking a lease-or-buy evaluation, using the post-tax cost of bank borrowing as...

A company is undertaking a lease-or-buy evaluation, using the post-tax cost of bank borrowing as the discount rate.

Details of the two alternatives are as follows:

Buy option:

   • To be financed by a bank loan

   • Tax depreciation allowances are available on a reducing-balance basis

   • Assets depreciated on a straight-line basis

Lease option:

   • Finance lease

   • Maintenance to be paid by the lessee

   • Tax relief available on interest payments and book depreciation

Which THREE of the following are relevant cashflows in the lease-or-buy appraisal?