TA Innovations Ltd $("$TAI$")$ is gearing up to launch a state$-$of$-$the$-$art robotic companion. Non$-$current assets, totaling $$960,000,$ will be required, with an initial payment of $$660,000$ and the remaining balance payable after one year. Accounting depreciation is on a straight$-$line method whereas capital allowance is at the rate of $25\%$ on a reducing balance basis. Tax of $20\%$ is payable when it arises.

Project expected to last $4$ yrs

The initial investment in working capital is estimated at $$256,000.$ It is expected $80$ percent of the working capital can be recovered at the end of the project. TAI envisions that, in four years, the robotic companion will become obsolete, and the residual value of the non$-$current assets will be $10$ percent of the cost. The project incurs incremental total fixed costs of $$714,000$ per year at current prices, including annual accounting depreciation.

C

includes dep $($non$-$cash$)$

Expected sales of the robotic companion are projected to be $180,000$ units per year, priced at $$24$ per unit, with a variable cost of $$18$ per unit, all in current price terms. TAI anticipates annual increases in inflation as follows:

$\backslash$table$[[$Variable cost$,6\%$