SL Plc has just developed a new product $******$ to be called WWO. The total development cost amounts to $480,000.$ The company is now considering whether to put it into production. The following information is available.

Production of WWO will require the purchase of new machinery at a cost of $2,400,000$ payable immediately. This machinery is specific to the production of WWO and will be obsolete and valueless when that production ceases.

The machinery has a production life of $4$ years and a $***$ normal production capacity of $30,000$ units per annum. The production capacity can be increased to $40,000$ units per year for a one$-$off modification cost of $50,000.$ This modification expense is payable at the end of the year in which the company wants to increase $******$ the production capacity. Once the modification is made, $******$ the production capacity will stay at $40,000$ per year. If the demand exceeds capacity, the company will only be able to sell the products up to the maximum capacity at the price stated below.

The company's policy is to depreciate this type of $***$ machinery using the reducing balance $(25$ percent$)$ method. Production costs per unit of WWO are estimated as follows:

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