Capital BudgetingFirst American Incorporated is considering buying a new copier.

Capital BudgetingFirst American Incorporated is considering buying a new copier. It will cost $9000 to purchase and $1000 to ship and install. It has a five year class life. At the end of four years they plan to sell the copier for $3500. The new copier will allow FA to increase revenues by $2000 each year but expenses will also increase by $500 each year. Account receivables will increase by $500 and account payables will increase by $800 if the copier is purchased.Straight-line depreciation will be used. FAs marginal tax rate is 34% and its cost of capital is 5%. Should FA purchase the new copier?