ABC Company is evaluating a new project that would require the purchase of equipment that is expected to increase revenues by $300,000 during the first year, $325,000 during the second year and $256,000 during the third year. The equipment will cost $650,000 and be housed in a new building with allocated overhead expenses of $25,000 per year. The equipment will be depreciated using the MACRS method over its 3 year class life and have a zero salvage value after 3 years. ABC Company has $10,000,000 par value bonds outstanding with 15 years left to maturity and a coupon rate of 6% (paid annually) while similar bonds are yielding 5.35%. ABC has 1,000,000 shares of common stock outstanding with a book value of $10 per share and a market value of $11.50. The Beta of ABC is 1.35 and the market risk premium is 6% while the expected return on the market is 9%. ABC has a tax rate of 40%. What is the NPV of the project? Will you recommend the purchase of the equipment? Explain your recommendation. (Points : 75)