Maryland Manufacturing $($M$2)$ produces a part using an expensive proprietary machine that can only be leased. The leasing company offers two contracts. The first $($unit$-$rate lease$)$ is one where M$2$ would pay $$20$ per unit produced, regardless of the number of units. The second lease option $($flat$-$rate lease$)$ is one where M$2$ would pay $$432,000$ annually, regardless of the number produced. The lease will run one year and the lease option chosen cannot be changed during the lease. All other lease terms are the same.

M$2$ sells the part for $$200$ per unit and unit variable cost $($excluding any machine lease costs$)$ are $$100.$ Annual fixed costs $($excluding any machine lease costs$)$ are $$1,440,000.$