A restaurant operator wishes to invest in an equipment for its business operation. The restaurant has two options, i.e., Equipment 1 and Equipment 2.

Equipment 1 will cost $13,500 and have a residual value at the end of its fiveyear life of $2,250, while Equipment 2 will cost $12,750 and at the end of its five-year life will have a scrap value of $1,050. The restaurant is using the straight-line method to depreciate its equipment.

A part-time kitchen worker will not be required after the investment of the equipment, and there will be an annual wage saving of $14,400. The following will be the operating cost excluding depreciation, for each equipment for five years.

Equipment 1

Year	1 $	2 $	3 $	4 $	5 $
Training cost	800
Repair and maintenance	750	750	850	700	750
Supplies of parts	300	300	300	300	300
Electricity expense	100	100	100	100	100

Equipment 2

Year	1 $	2 $	3 $	4 $	5 $
Training cost	700
Repair and maintenance	600	600	650	700	650
Supplies of parts	500	500	500	500	500
Electricity expense	100	100	100	100	100

The income tax rate is estimated at 30% of the profit for each year.

Required:

1. Calculate the profit after tax for each equipment.

2. Calculate the net present value for each equipment using a discount rate of 10% per annum.

3. Based on your calculation in (b), explain with reason which equipment should the restaurant invest in.