A construction firm needs a new small loader. It can be leased from the dealer for 3 years for $5,500/year which includes all maintenance, or it can be purchased for $20,000. If purchased, the loader will have a salvage value of $7,000 after 7 years. Buying the loader will lead to maintenance costs of $500 the first year, increasing by $300 each subsequent year. The firm's interest rate is 12% per year. Compare the AEC (Annual Equivalent Cost) of leasing versus buying the loader. What should the firm do? Lease value of $5,500 is less than the AEC of buying the machine ($5,720). LEASE Lease value of $5,500 is greater than AEC of buying the machine ($4,954). BUY Lease value of $5,500 is greater than the AEC of buying the machine ($4,255). BUY Lease value of $5,500 is less than the AEC of buying the machine ($5,990). LEASE