The H2O-Chemical Company is considering a new production facility on a plot of land that it already owns and it is located near a residential area. The land has a current market value of $1 million and was acquired 4 years ago for $600,000. If this project of average risk is undertaken, new machinery worth $195,122 in real term must be purchased. A building must also be erected that costs $487,804.9 in real term. Both the new building and the machinery are eligible for capital cost allowances on the declining balance at a rate of 15 percent. The new facility is expected to generate before tax net cash revenues of $250,000 per year for the next 10 years. The salvage value of the new machinery and the building at the end of 10 years is expected to be $80,000 and $70,000, respectively. Net working capital must be increased by $160,000 at the start of the project. If the land is not sold today, it will be sold in 10 years for $1,600,000. The firm