Fauci Inc. is considering the introduction of a new product: Coronavirus Shields (CS).

CS were developed at an R&D cost of $1M over past 3 years

New machine to produce CS would cost $2M

New machine lasts for 15 years, with salvage value of $50,000

New machine has a 10-year useful life

CS need to be painted; this can be done using excess capacity of the painting machine, which currently runs at a cost of $30,000 (regardless of how much it is used)

Operating cost: $40,000 per year

Sales: $400,000, but cannibalization would lead existing sales of regular masks to decrease by $20,000

Working Capital (CS): $250,000 needed over the life of the project Tax rate: 34%

Opportunity cost of capital: 10%.

Required: Should Fauci Inc go ahead with the production of CS?