The SSC Company is considering making a bid to supply the highway department with rock salt to drop on roads in the county during winter. The contract will guarantee a minimum of 50,000 tons in each year, but the actual quantity may be above that amount if conditions warrant. Management believes that the actual quantity will average 80,000 tons per year. The firm will need an initial $1,600,000 investment in processing equipment to get the project started. The contract will last for five years and is not expected to be renewed. The accounting department has estimated that annual fixed costs will be $500,000 and that variable costs should be about $45 per ton of the final product. The new equipment will be depreciated using MACRS with a class life of five years. At the end of the project, it is estimated that the state will grant the contract a selling price of $60 per ton, though it may get some lower bids if the contract is opened for competitive bidding. The engineering department estimates that the project will need an initial net working capital investment of $115,000. The firms WACC is 10%, and the marginal tax rate is 35%.