Smith Inc. is considering launching a new product. The initial investment for

equipment and set$-$up is $$750,000.$ The top management has conducted several trips

to different cities to gauge potential demand. These trips have cost the company

approximately $$80,000$ so far. The project is expected to last for $6$ years and

generate a revenue of $$350,000$ in the first year, which will then increase by $3\%$ each

year throughout the entire project. The operating costs are estimated to be

$$200,000$ for the first year and which will then increase by $2\%$ each year throughout

the entire project. If the project proceeds, the total investment in net working

capital will increase by $$90,000$ initially, but The company will recover $40\%$ of its

investment at the end of the fourth year and $30\%$ at the end of the sixth year. The

tax rate is $35\%,$ and the CCA rate is $15\%.$ The equipment can be sold for $$200,000$ at

the end of the project. To finance the project, the company will borrow $$300,000$ at

a $5\%$ interest rate and finance the remaining amount internally. The loan duration

will match the project duration $.$The appropriate discount rate for the project is $10\%.$

Determine if the company should undertake this project using NPV analysis. $(10$

marks$)$