Wilde Marketing Partnership, marketing consultants, is considering a project requiring considerable expansion of its current operations. This will require the purchase of equipment at a cost of \($2\) 400 000. The new equipment will have a 10-year life and then have no resale value. The new project would produce a net increase in cash inflows of \($480\) 000 each year. The company has a cost of capital of 12%.

Required

(a) What is the payback period for the equipment?

(b) Calculate the net present value of the equipment.

(c) What is the net present value index for the equipment?

(d) Should the firm purchase the equipment? Why or why not?