MBA Corp plans to use its idle building that can potentially be rented for $$15,000$ per annum to set up a manufacturing machinery there.

The current Revenue of MBA Corp is $$500,000.$ If the company takes up this project, its revenue is expected to increase by $30\%$ for the next three years and then double $($from the $3$rd year level$)$ for the next two years.

After $5$ years, the project will be scrapped and the salvage value is expected to be $$80,000$

The COGS are expected to remain the same at $60\%$ of revenue. The SG&A and other operating costs will increase by $$10,000.$

The cost of the machinery is expected to be $$250,000.$ The machinery installation cost is expected to be $$20,000.$ This investment will require additional inventory of $$40,000$ and increase the accounts payable by $$20,000$

The company spent $$5000$ in researching the viability of the building for machine installation.

The company hires you as a financial manager to advise if they should take up this project or not.

Other information: Full $100\%$ depreciation is taken for the CAPEX in the year in which it is done

Tax rate $=25\%$

For calculating WACC, please use the below information:

Cost of new Debt: $8\%$

Cost of Preferred Shares: $6\%$

Cost of Equity: Need to calculate

Beta $=1\mathrm{.}2$ Rf $=2\%$ RM$-$Rf $=6\%$

Target Capital Structure: Debt : Preferred Sh : Equity $=3$ : $1$ : $6$

answer the following questions please:

$1.$ calculate the NPV

$2.$ what is the terminal value

$3.$ what is the conclusion, should the project be undertaken or not and why