A Firm Is Considering the Purchase of a Capital Good

A firm is considering the purchase of a capital good that will generate an additional $400 income each year for 4 years (after which time the capital good is useless and has no scrap value) . The capital good will cost $1,600. If the interest rate is 3 percent, it follows that the firm should

A) purchase the capital good.
B) not purchase the capital good.
C) purchase the capital good only on the condition that the expected inflation rate is greater than the nominal interest rate.
D) not purchase the capital good since the expected inflation rate is less than the real interest rate.
E) There is not enough information to answer the question.