USX is considering adding an additional furn

ace that will operate for ten years. Last year the company commissioned a feasibili

ty

study that cost $$1$ million. The study came up with the followi

ng numbers. The new furnace costs $$1,000$ million and has a salvag

e

value of $$200$ million at the end of the ten$-$year period. Using

the new furnace increases sales by $$150$ million per year and inv

olves

operating expenses of $$10$ million per year. Moreover, working cap

ital requirements increase by $$20$ million immediately. Accordi

ng

to IRS rules the new furnace must be deprec

iated straight line over eight years. The ne

w furnace will need parts from an old fu

rnace

USX already owns. The old furnace is fully

depreciated and has a resale value $($after

$-$tax$)$ of $$30$ million. Without the parts, wh

ich are

no longer manufactured, the old furnace has no resale value. The cor

porate tax rate is $35\%$ and the

cost of capital is $10\%.$ Shou

ld USX

go ahead with the new furnace