Your firm is considering the following project for a new product:

• The project has an anticipated economic life of 3 years.

• The company will have to purchase a new equipment that costs $2.4 million.

• The equipment will be depreciated on a straight-line basis over 3 years to a zero salvage value. The

  company plans to sell the equipment to a competitor for $500,000 at the end of the 3-year period.

• If the company goes ahead with the proposed project, it will require an immediate increase in net

  working capital of $200,000. The net working capital will be recovered after the project is completed.

• The equipment will be used to produce items at a cost of $35 each. Those items will be sold for $60

  each. Projected sales are 60,000 each year.

• Last year, a market research study for the new product cost $150,000.

• The company's interest expense each year will be $30,000.

• The company's cost of capital (i.e., the required rate of return on this project) is 15%.

• The company's tax rate is 34%.

  Using the NPV method, evaluate whether the project should be accepted or not?