XYZ Trucking Company is evaluating a potential lease agreement on a truck that c

XYZ Trucking Company is evaluating a potential lease agreement on a truck that costs $40000 and falls into the MACRS 3-year class. The loan rate would be 10 percent and would be amortized over the 4-year period if XYZ decided to borrow money and buy the asset rather than lease it. The loan payments would be made at the end of the year. The truck has a 4-year economic life and its estimated residual value is $10000. If XYZ buys the truck it would purchase a maintenance contract that costs $1000 per year payable at the end of each year. The lease terms which include maintenance call for a $10000 lease payment at the beginning of each year. XYZs tax rate is 40 percent. Should the firm lease or buy?