The president of E-Games, an online gaming company, is considering the purchase of some equipment used for the development of new games. The cost is $400,000 and the economic life is five years. Annual cash inflows from operations would increase by $110,000, giving a total five-year savings of $550,000. The required after-tax rate of return is 14 percent. Ignore the effect of income taxes. 

1. Compute the NPV. Should E-Games acquire the equipment? 

2. Suppose the required after-tax rate of return is 10 percent instead of 14 percent. Should E-Games acquire the equipment? Show computations.