John operates a car repair centre.

He is considering purchasing some new equipment that will cost $15,000.

John expects to generate new, additional, pre-tax revenues of $10,000 annually for each of the next three years as a result of having the new equipment.

Some of these additional revenues will be on credit so John expects his investment in Accounts Receivable will increase by about $2,000 during the three years of the equipments use.

After three years he plans to sell the equipment to a scrap dealer for $500, close the business and retire to the beaches of the Great Barrier Reef, Australia.

The equipment is Class 4 with a CCA rate of 20%.

Johns tax rate is 35%.

Johns financial advisor (you) estimates his companys WACC is 12%.

Using the capital expenditure investment analytical techniques & all the various financial measures we have developed and practiced in class, recommend to John whether he should purchase the equipment or not and indicate, clearly, the business or investment reasons why