Peel Ltd$.$ is considering an expansion of their production capacity. The company has asked you to evaluate whether the project should be undertaken. To help with your analysis, management has provided you with the following information:

The project will require an initial investment of $$2$ million in a new factory. The company has adopted a $5-$year planning horizon, after which it intends to re$-$evaluate the investment. The factory will be built on a block of land that is being purchased for $$1$ million. Land values are projected to grow at an average rate of $3\%$ per annum for the foreseeable future. The project will also require an additional investment of $$700,000$ in net working capital. Based on a marketing study conducted at a cost of $$80,000$ net revenues have been projected at $$1,900,000$ per annum over the five$-$year period.

Finally, the factory is expected to have a salvage value of $$900,000$ at the end of the project and the analysis is to be undertaken on the assumption that the land and the factory will all be sold at the end of the project. The firm$$s tax rate is $40\%,$ its cost of capital is $15\%$ and the CCA rate to be used for the factory is $30\%.$