If a machine costs $40,000, and $5,000 a year for the lessor to maintain and insure, what equivalent annual cost would serve as the basis of a full-service lease payment for a eight-year operating lease, paid in arrears (at the end of each year), if the lessor's relevant cost of capital is 7%?

a.$5,000.00

b.$7,536.05

c.$11,698.71

d.$3,732.06

e.$8,732.06