Automotive Assemblers is considering buying new equipment with an investment value of $30,000. The equipment has a 5-year life and no salvage value at the end. There are many uncertainties in the industry and, therefore, Automotive Assemblers estimated the cash inflows for three different scenarios. Should Automotive Assemblers make this investment? The firm has a cost of capital of 10.5%, and the following are the expected cash inflows.

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Year 1 2 3 5 Expected cash inflows Most likely $6,500 5,770 7,850 7,240 4,260 Pessimistic $4,500 3,500 5,620 3,680 2,950 Optimistic $8,350 7,630 12,520 11,410 9,110