As part of the Wellness Centre Project, the plan is to build a small gym on the rooftop of thehotel. You have been appointed to help the Sales and Marketing manager to make decisionwhether to rent or buy specific equipment items. The required items are included inAppendix 1 together with costing information. The budget for the required equipment is$65,000 for the life of the equipment.Regarding the buying of the equipment, the useful life is predicted to be 3 years after whichreplacement is needed. At the end of its useful life, it is expected to be sold for the residualvalue of 25% of its original cost. A servicing contract will be drawn up with a company totake care of the equipment. Servicing will add 5% to the cost each equipment. This is to bepaid separately as one lump sum at the beginning of the term and will last 3 years.For the renting option, choose the one that is the most beneficial for the business. The rentis expected to rise by 12% each year. The rent is paid at the beginning of each period.Servicing of the equipment is included in the rent.REQUIREDThe manager would like to know whether it would be better for the Hotel to buy therequired equipment or to rent it. Explore both options and make a recommendation. Takeinto account the time value of money at the discount rate of 5%. Include advantages andOption 1 – Sales and Marketing DepartmentBIZ201 Assessment 4 Brief 20191111 Page 4 of 19disadvantages of each option and justify your choice.