Pizza Planet Co. paid a consultant to study the desirability of installing some new equipment. The consultant submitted the following analysis:
Cost of new equipment $50,000
Present value of after-tax revenues from operation $45,000
Present value of after-tax operating expenses $10,000
Present value of depreciation expenses $43,750
Consulting fees and expenses $375
The corporate tax rate is 40%. Explain whether Pizza Planet Co. should install the new equipment. Justify your response with supportive examples and references.