Diamond Landscaping Inc. is a successful business located outside of Toronto. The firm is considering an expansion project: a new 10,000 square foot greenhouse, which would sit on land the company already owns. The land was purchased by the firm for $200,000 five years ago. If the expansion project does not go ahead, the land could be sold today for $450,000.

The new greenhouse structure has an expected initial cost of $2 million and forecasted annual increased cash flows of $525,000 would result from the expansion for the next 8 years. This is in addition to the firm's regular cash flows of $950,000 per year. 

The firm has 5,000 bonds outstanding that currently have a yield to maturity of 8%. Each bond has a face value of $1000 and the 6% coupon is paid semiannually. The bonds were issued 2 years ago and will mature 5 years from today.  The firm also has 30,000 preferred shares outstanding with a par (book) value of $10 per share and an annual dividend of $4 per share. The yield on those preferred shares is now 9%. The last component of the firm's capital structure is 200,000 common shares. Each common share is expected to pay $1 dividend next year, which is expected to grow at an annual rate of 6% indefinitely. Common shareholders require a total return of 10% on their investment. The firm has a small business tax rate of 25%.

The firm has come to you for advice. Should they go ahead with the expansion project? (Explain your reasoning and/or your calculations)