A growing company is considering a project that requires investing in some new equipment to help improve profitability. Sales will be $552,500, fixed costs will be $45,000 and variable costs will be $377,000. Working capital requirements will be $40,000 and will be recovered at the end of the project. The initial cost of the equipment is $200,000 and it can be sold for $30,000 at the end of the projects 5-year life. Depreciation is straight-line, the required return is 12% and the tax rate is 34%. Should the project be undertaken?

Please provide an explanation!