Your CEO is worried a similar situation could happen at your company and has asked you to try and determine if investing in greater cybersecurity is a smart move. You call your friend who works for a major cybersecurity firm and ask what products, pricing, and guarantees they have.

Well, the bad news is they have no $$guarantees$$ but they can show evidence that even one major attack would result in significant losses for your company. Here is the information you receive:

Cyber attacks are up $600\%$ from pre$-$pandemic levels.

The average cost of a cyber attack on a small business ranges from $$120,000$ to $$1\mathrm{.}24$ million per successful attack.

$71\mathrm{.}1$ million people fall victim to cyber crimes yearly.

Your company has been quoted $$5\mathrm{.}5$ million for a new cyber defense system. The new program will likely protect the company for $6$ years and then need to be replaced as technology improves. Using sophisticated detection skills, they determine that your company$$s website faces approximately $1,800$ cyber security incidences a day, $365$ days a year. They also estimate that $1$ in $750$ attacks are successful, and the cost of the average attack is $$1,585$ due to lost merchandise, notification of the customers affected and time spent by employees following up on the incidents. Using a $5$ years MACRS schedule, a tax rate of $21\%$ and a cost of operation of $$30,000$ a year to monitor the system, should you buy the system? Your company estimates its cost of capital is $7\mathrm{.}5\%.$