Your company decided to offer product delivery service and would need a truck for the delivery.

You are evaluating the following two options.

Option $1$: Your company can lease a truck at a pretax cost of $$27,000$ per year.

Option $2$: Your company can buy a truck at a cost of $$84,000,$ with annual pretax maintenance

expenses of $$14,000.$ The truck will depreciate to zero on a straight$-$line basis. The truck has

a $4$ years life and will have a salvage value of $$18,000$ at the end of its life.

If the tax rate is $35\%$ and the discount rate is $10\%,$ which option would you prefer? $($Hint: compute the equivalent annual cost $($EAC$).)$