(5 points) Assume the following information for firm Omega: Bonds = 30 million with

yield to maturity = 8%; Stocks = 100 million; covariance of the stock returns with the

market = 0.048; standard deviation of the market = 0.20; market risk premium = 0.075;

risk free return = 0.06; corporate tax rate = 0.28. Omega plans to buy a new machine

that costs 40 million. The machine will lead to annual cash flows of 6 million per year

for 20 years. The purchase of machine will not change the risk level of the firm. Should

Omega buy the machine? Show your answer!