If a machine costs $50,000, and $5,000 a year for the lessor to maintain and insure, what equivalent annual cost would serve as the basis of full-service lease payment for a six-year operating lease, paid in arrears if the lessor's cost of capital is 8%? What if the payment were made in advance, at the beginning of the year?

A. $15,816

B. $73,114

C. $17,155

D. $55,000

The equivalent annual cost (EAC) is a measure of the annualized dollar costs of an asset. This measure is useful in comparisons of different assets that perform similar functions but have different types of costs or different useful lives.