Mr. Alfonso, the manager of the capital budgeting department at the Letta Corporation (LC) is evaluating a project that involves the expansion of drip irrigation system of the company. The invoice price of the system is $1,080,000, and it would cost LC additional $22,500 to install the system. The system falls into the MACRS 3-year class, and LC expects to sell the system after 3 years for $605,000. The system would require an increase of net working capital of $15,500. The irrigation system would not change revenues, but is expected to save the company $380,000 per year before tax operation costs, mainly due to efficient utilization of water. LC marginal tax rate is 35%, its WACC is 12%. What is your advice to Mr. Alfonso? Show you work and justify your advice