Basil Robekins has an idea for a new type of ice cream cone made from candy bars (like Butterfinger, etc.). He thinks his normal customers will not buy more often because they are old fuddy duddies (like Dr. Jones) stuck in their snacking habits. He definitely thinks they wont even try the new cones. Basil thinks instead he can reach the teenage customer market (who never come to the his ice-cream shop) because they will be excited to pick and choose from over 31 different candy bars and wont get bored with the selection of either a sugar or a waffle cone. However, he will need to upgrade to a more flexible cone maker that can adjust to the different hardness of each type of candy bar. He has located such a cone maker for a cost of $40,000. He knows this will be a big risk for him and remembers how his brother-in-law got burned buying a $20,000 tunnel oven for super-duper long pizzas. Basil thinks he can get 5 years out of the flexible cone maker. But he knows that is what his brother-in-law thought about the tunnel oven which lasted only 3 years. Basil also knows that nobody will want his flexible cone maker because the corn syrup in most candy bars leaves a really ugly stain on the metal. However, he knows a scrap metal dealer who will haul away any equipment for free. He has done some market research and figures he can increase his annual sales by 27%. This would translate into an extra profit of $12,000 per year. Using the suggested risk-adjusted interest rates below, advise Basil as to whether he should or should not purchase the flexible cone maker.

Risk-Adjusted MARR (%)	Applies to:
6.00	Equipment replacement
8.00	New improved equipment
10.00	Equipment for a new product in normal market
12.00	Equipment for a new product in related market
16.00	Equipment for a new product in new market
20.00	Equipment for a new product in foreign market

a) What MARR should Basil select in the above table?

b) What would be the rate-or-return on the investment in the flexible cone maker?

c) Should Basil buy the flexible cone maker?