Suppose your company can purchase new equipment for $170,000 Your company's profits would increase by $40,000 per year for 6 years. The equipment becomes worthless at the conclusion of the 6th year, no salvage value. You assume an inflation rate of 2%, the risk of this equipment not leading to this profit is 2%, and your cost of capital would be 4% to purchase this equipment. Should you purchase this equipment?

Hints: (1.08)^2=1.17 (1.08)^2=1.47 (1.08)^3=1.26 (1.08)^6=1.59 (1.08)^4=1.36 (1.08)^7=1.71