Nova Corp. is considering purchasing a new crop harvesting machine. The new machine will be more efficient. There will be a reduction in costs as a result of lower amounts of damage to the crops that are harvested. The new equipment costs $$275,000$ and will require shipping and delivery costs of $$4,500$ as well as installation costs of $$5,500.$ Management has estimated that the additional production will increase sales revenues $$170,000$ per year however, operating costs will increase by $$60,000$ as well. The damage to the crops as a result of the harvesting will decrease by $$10,000$ per year. The harvesting equipment belongs to a CCA class that has a $25\%$ CCA rate. The new equipment has a useful life of $4$ years after which it can be salvaged for $$120,000.$ If the new equipment is purchased, the company

will require an increase of $$18,000$ in cash and an increase of $$8,500$ in inventory. To finance part of the investment in current assets, accounts payable will have to increase by $$5,500.$ All investments in net working capital will be fully recovered at the end of the useful life. The additional increase in the market size was revealed by a marketing survey that was completed one year ago. Nova Corp. needs to pay the marketing firm $$5,000$ for the market survey. Assume the company has a cost of capital $12\%$ and a $40\%$ tax rate. The CCA class will remain open at the end of the project. Based on NPV analysis, should the project be accepted? $(20$ points$)$