Ivy Botanicals, a candle-making company in Lethbridge Alberta has had huge success selling its fragrant candles. They are considering doing an expansion that will allow them to setup a production and distribution facility in Nova Scotia to better serve the Eastern market. The company has put a $30,000 nonrefundable deposit on a building they are considering purchasing for their project. If they purchase the building for $800,000 it will take them a year to do all necessary preparations to begin producing candles. Ivy will purchase two state of the art candle machine machines at a price of $200,000 each. Final payment of the equipment will be due exactly one year after the acquisition of the building. An upgrade to the candle making machines will be required in year 5 in the amount of $75,000 (total for both machines). There will also be a working capital requirement of $30,000 upon the commencement of the project. Pre tax revenue of $350,000 will begin in the second year and remain the same until the end of the project in year 12. Pre tax expenses in the first year will be $100,000 then from year 2 to year 12 be $125,000. At the end of the project the building can be sold for $150,000 and both pieces of equipment can be salvaged for a total of 50,000. Required: Using the NPV approach, determine if Ivy Botanicals should proceed with the expansion. Show all your calculations.

Corporate Finance