1 A company is considering the purchase of equipment costing $84000, which will permit it to reduce its existing labour costs by $20000 a year for 12 years. The company estimates that it will have to spend $2000 every 2 years overhauling the equipment. The equipment may be depreciated for tax purposes by the straight-rine method, over a 12-year period. The company tax rate is 30 cents in the dollar and the after-tax cost of capital is 10 per cent per annum. Assuming all cash flows, including tax payments, are made at the end of each year, should the company purchase the equipment