Perform the Cost Benefit Analysis for the given Scenario

DO NOT HARDCODE VALUES IN THE FORMULA $-50\%$ Deduction

$(20$ Points$)$I buy Widgets from a wholesaler at $$3\mathrm{.}50$ each and sell them from my store in a strip mall for $$10\mathrm{.}00.$ It costs $$1\mathrm{.}50$ to ship them to my store, so I clear $$5\mathrm{.}00$ per Widget.$$ Demand for my Widgets is $50,000$ units, so my Gross Profits are $$250,000/$year$.$

According to a trade organization, Price Elasticity models show if I could sell them for $$8\mathrm{.}00,$ I could sell $100,000$ units.$$ I$\text{'}$d only make $$3\mathrm{.}00$ per unit, but my gross profit would increase to $$300,000.$ However, the increase in market share would eventually translate to more sales when customers return to buy new Widgets to replace their worn out Widgets.$$ The risk of this model being wrong is very low since stores in other states have experienced similar volume increases.

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With a sizeable investment, I could practically eliminate the shipping costs, and I know I could make them cheaper if I had the equipment.$$ I would have to buy $$50,000$ in raw materials.$$ Land about a mile away is available for $$150,000$ and it would cost $$350,000$ for the equipment and a building.$$ My shipping costs would drop to only $15$ cents per Widget, and my cost per unit would only be $$1\mathrm{.}00.$

I$\text{'}$m not good a financial stuff, so a $$550,000$ up front cost doesn't seem worth it to me$,$ so I've asked you for your opinion.

The Building and Equipment depreciate over $5$ years with a salvage value of $$250,000.$ The land would appreciate in value to $275,000.$ My tax rate is $35\%$ and I can get a loan at $5\mathrm{.}8\%$ and my Money Market Savings Account earns $2\mathrm{.}29\%$

For the terminal cash flow, assume I will have and can sell my raw materials for the same $$50,000.$ This is not an annual expense since the cost of this material is in the Cost of Goods Sold $($Cost per Widget$).$ What do you think?$$ Should I do it$?$