Details of McCormick Plant Proposal McCormick & Company isconsidering a project that requires an initial investment of $24million to build a new plant and purchase equipment. The investmentwill be depreciated as a modified accelerated cost recovery system(MACRS) seven-year class asset. The new plant will be built on someof the company's land, which has a current, after-tax market valueof $4.3 million. The company will produce bulk units at a cost of$130 each and will sell them for $420 each. There are annual fixedcosts of $500,000. Unit sales are expected to be $150,000 each yearfor the next six years, at which time the project will beabandoned. At that time, the plant and equipment is expected to beworth $8 million (before tax) and the land is expected to be worth$5.4 million (after tax). To supplement the production process, thecompany will need to purchase $1 million worth of inventory. Thatinventory will be depleted during the final year of the project.The company has $100 million of debt outstanding with a yield tomaturity of 8 percent, and has $150 million of equity outstandingwith a beta of 0.9. The expected market return is 13 percent, andthe risk-free rate is 5 percent. The company's marginal tax rate is40 percent. Should the project be accepted?