Patel Petroleum Inc. is in the process of purchasing automated drilling equipment. The first cost of the equipment is expected to be $1.1 million. Maintenance costs will be $15.000 the first year and increase by $1,000 each year thereafter. Due to the automated nature of the equipment an annual savings of $75,000 will be realized. When not in use by Patel, the equipment will be used by Gulf Oil under a contract which pays PP $40.000 per year. Required insurance is payable by PP at the beginning of each year at a cost of $5,000 per year. After ten years the equipment will require rebuilding and overhaul costing $30,000. At the end of its 15-year useful life the salvage value is expected to be $200,000. If PP uses 4% to evaluate projects, determine the PW of the equipment. Is the purchase justified (a good purchase)