The Krusty Krab produces 50,000 krabby patties each week. The equipment costs $5,000 and will remain productive for three years. The annual labor cost (SpongeBob) is $8,000.

a) Mr Krabs has the option of purchasing $10,000 of new equipment, with an operating life of five years. It would reduce labor costs to $4,000 per year. Should Mr Krabs purchase this equipment?