Which THREE of the following items are errors within the appraisal?

A company plans a four-year project which will be financed by either an operating lease or a bank loan.

Lease details:

• Four year lease contract.

• Annual lease rentals of $45,000, paid in advance on the 1st day of the year. Other information:

• The interest rate payable on the bank borrowing is 10%.

• The capital cost of the project is $200,000 which would have to be paid at the beginning of the first year.

• A salvage or residual value of $100,000 is estimated at the end of the project’s life.

• Purchased assets attract straight line tax depreciation allowances.

• Corporate income tax is 20% and is payable at the end of the year following the year to which it relates.

A lease-or-buy appraisal is shown below:

Which THREE of the following items are errors within the appraisal?
A . Lease payments are timed incorrectly
B . Tax relief on lease payments have not been lagged correctly
C . Using the 10% discount rate is incorrect
D . The project’s operating cashflows should be included
E . The bank loan repayments should be included
F . The salvage value has been included within the lease option