Pizza Planet Co.

Pizza Planet Co. paid a consultant to study the desirability of installing some new equipment. The consultant submitted the following analysis:

Cost of new equipment	$50,000
Present value of after-tax revenues from operation	$45,000
Present value of after-tax operating expenses	$10,000
Present value of depreciation expenses	$43,750
Consulting fees and expenses	$375

The corporate tax rate is 40%. Explain whether Pizza Planet Co. should install the new equipment. Justify your response with supportive examples and references.