"Banff Inc. has developed a powerful efficient snow blower that is significantly less polluting than existing snow blowers currently on the market. The company spent $2,000,000 developing this product and the marketing department spent another $400,000 to assess the market demand. It would cost $28 million at Year 0 to buy the equipment necessary to manufacture the efficient snow blower. The project would require net working capital at the beginning of each year equal to 20% of sales (NOWC0 = 20%(Sales1), NOWC1 = 20%(Sales2), etc.). The efficient snow blowers would sell for $3,800 per unit, and the firm believes that variable costs would amount to $880 per unit. The company expects that the sales price and variable costs would increase at the inflation rate of 3% after year 1. The companys non-variable costs would be $950,000 in Year 1 and are expected to increase with inflation. The efficient snow blower project would have a life of 4 years. If the project is undertaken, it must be continued for the entire 4 years. The firm believes it could sell 3,400 units per year. The firm thinks that this is an average risk project. The equipment would be depreciated using a CCA rate of 30%. The estimated market value of the equipment at the end of the projects 4-year life is its undepreciated capital cost (i.e. book value) at the end of year 4. The firm has other assets in this asset class. Its federal-plus-provincial tax rate is 30%. Its cost of capital is 9% for average risk projects. Low-risk projects are evaluated with a WACC of 6%, and high-risk projects at 12%. Assume that the half-year rule applies to the CCA."