XYZ company is deciding to purchase or not new equipment that costs $900,000. The management predicts the life of new asset to be four years and expects it to generate an additional $180,000 of annual profits. Moreover, in the fifth year, the company sells the equipment for its residual value of $60,000. This is higher than the companys current required rate of 9%. The goal is to make sure the company is making better use of its cash.