i$.$ Mills Mining is considering an expansion project. The proposed project has the following features:

The project has an initial cost of $$500,000-$this is also the amount which can be depreciated using the appropriate accelerated depreciation method.

If the project is undertaken, at $t=0$ the company will need to increase its inventories by $$50,000,$ and its accounts payable will rise by $$10,000$ for the first year and continue increase $10\%$ every year. This net operating working capital will be recovered at the end of the project's life $)=(4.$

If the project is undertaken, the company will realize an additional $$600,000$ in sales over each of the next four years. The company's operating cost $($not including depreciation$)$ will equal $$400,000$ a year.

The company's tax rate is $30$ percent.

At $t=4,$ the project's economic life is complete, but it will have a market salvage value of $$50,000.$

Please evaluate this project by using the following WACC information.

The company's capital structure is $70$ percent equity, $30$ percent debt.

The yield to maturity on the company's bonds is $9$ percent.

The company's year$-$end dividend is forecasted to be $$0\mathrm{.}80$ a share.

The company expects that its dividend will grow at a constant rate of $9$ percent a year.

The company's stock price is $$25.$

$*$ The company anticipates that it will need to raise new common stock this year. Its investment bankers anticipate that the total flotation cost will equal $10$ percent of the amount issued. Assume the company accounts for flotation costs by adjusting the cost of capital.