Investigation and a reasonable amount of footwork brought the following information to the attention of April Kehg, executive assistant to the board of Swiss Ventures Inc. She, with your able assistance, will prepare a proposal to submit to the board under the heading "the St. Bernard Venture." Capital outlays on the project are expected to occur over the next two years, and the project, which will produce widgets for the wireless communication business, will be a unique entity to the Swiss Ventures family of projects. An immediate outlay of $600,000 will be required for the land to house the specialized building that will be constructed over the next year. Final payment on the building will amount to $1.1 million inclusive and will be due in exactly one year. Payment for the machinery to produce the widgets will amount to $175,000 and will be due after the initial test period, which will take to the end of the second year.
After the testing period, cash flows will begin in the third year. It is assumed that the revenues and expenses will be acknowledged at the end of each year. Beginning in the third year, revenues are expected to amount to $875,000 until the 12th year.
Expenses are projected at $325,000 to the 12th year from the third year. These estimates are the averages of estimates obtained from the marketing staff and the production department. The expected values have been determined through preliminary work by Kehg. In 12 years everything will end, as the market for the widget will be gone. The building will be scrapped for $225,000, and the machinery will be sold for $50,000. It is anticipated that the land will appreciate in value by 9 percent a year.
The following additional information is available:

CCA rate: building.............4%
machinery........................30%
Corporate tax rate...........30%
Cost of capital.................15%
Capital gain...................50% of gain taxable
Would you recommend proceeding with the St. Bernard Venture?