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Burundi Airlines is planning to obtain a Boeing 757 at a cost of $24 million. The plane has the uncertain life span: it might last for six years (probability 50%), 7 years (probability 30%), or 8 years (probability 20%). The airline will depreciate the plane on a straight-line basis with a life of 6 years, with no residual value. While the plane is flying, it will generate a pretax income of $6 million annually. The tax rate of Burundi is 40% and its discount rate is 9%. Should Burundi buy the new plane?

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