The proposal involves investment in group of machines that would greatly increase the firm's ability to manufacture large quantities of clay kilns. The purchase price of this machinery would be $1.45 million and installation costs would total $175,000. The slack adjuster equipment would have a useful life of 5 years, but for tax purposes, depreciation charges would be according to the 7-year MACRS class that applies for most industrial equipment (the amount to be depreciated is the sum of the machinery and installation costs). It is anticipated that variable costs will be approximately 57 percent of sales. In the project