The initial investment in Plant and Equipment will be $175,000.

The equipment will be depreciated on a straight-line basis over 5 years with no expected salvage value. The project will also require an initial investment in net working capital of $30,000 which the company will recover at the end of the 5 year period. Sales are forecast to be $220,000 each year, with cash operating expenses of $90,000. The company tax rate is 30%, and their weighted average cost of capital is 10%

Evaluate the project described above and advise the company as to whether or not they should undertake the investment. Show all working.