Pliable Corporation is trying to decide when to purchase a new computer system for its offices. The companys opportunity cost of capital (risk-adjusted discount rate) is 10 percent annually.Analysts have projected that the cost of the computer system will fall over time due to improvements in manufacturing methods. Analysts have also estimated the present valueas of the date of purchaseof Pliables savings from purchasing the computer system. These savings increase with the length of delay in purchasing the computers because of anticipated enhancements over time in computer capacity and speed. The table below shows both sets of estimates.

Year of Purchase	Cost of Computer System (at date of purchase, $ thousands)	Present Value of Savings (evaluated at the date of purchase, $ thousands)
0	$100	$160
1	$90	$172
2	$82	$182
3	$76	$190
4	$72	$196
5	$70	$200

6. $69 $202

A. Find the optimal date for Pliable to purchase the computer system, assuming that the future cash flows are subject to geometrically increasing risk. Explain your reasoning and show your work.

B. Suppose instead that Pliable faces risk that is just one-period-ahead and that the risk-free rate of return is 3 percent. Find the optimal date for Pliable to purchase the computer system. Explain your reasoning and show your work. If you find any discrepancy between your answers to (A) and (B), please provide a verbal explanation.