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Deutsche Transport can lease a truck for four years at a cost of €35,000 annually. It...

Deutsche Transport can lease a truck for four years at a cost of €35,000 annually. It can instead buy a truck at a cost of €85,000, with annual maintenance expenses of €15,000. The truck will be sold at the end of four years for €23,000. Ignore taxes.

a. What is the equivalent annual cost of buying and maintaining the truck if the discount rate is 12%?

b. Which is the better option: leasing or buying?

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