1. Suppose a small company considers expanding its business. Buying new machinery and related equipment will cost $200,000 (which the owner has available from past profits). Owner has calculated that that investment will raise revenues by $23,000 per year. The owner also estimates that it will become necessary to replace the new machinery after 8 years. Should the owner buy the additional machinery if the real interest rate is 3 percent? What if it were 3.5 percent? Since this is companys cash flow, should the owner care about the interest rate at all?