Certainty Equivalent

Muggins is evaluating a project to produce a new product. The product has an expected life of four years. Costs associated with the product are expected to be as follows.
Variable costs per unit
Labour: $30 Materials:
6 kg of material X at $1.64 per kg
3 units of component Y at $4.20 per unit
Other variable costs: $4.40
Indirect cost each year
Apportionment of head office salaries $118,000 Apportionment of general building occupancy $168,000
Other overheads $80,000, of which $60,000 represent additional cash expenditures (including rent of machinery)
To manufacture the product, a product manager will have to be recruited at an annual gross cost of $34,000, and one assistant manager, whose current annual salary is $30,000, will be transferred from another department, where they will be replaced by a new appointee at a cost of $27,000 a year.
The necessary machinery will be rented. It will be installed in the company’s factory. This will take up space that would otherwise be rented to another local company for $135,000 a year. This rent (for the factory space) is not subject to any uncertainty, as a binding four-year lease would be created.
60,000 kg of material X are already in inventory, at a purchase value of $98,400. They have no use other than the manufacture of the new product. Their disposal value is $50,000.
Expected sales volumes of the product, at the proposed selling price of $125 a unit, are as follows.
Year
1 2 3 4
Expected sales
Units 10,000 18,000 18,000 19,000

All sales and costs will be on a cash basis and should be assumed to occur at the end of the year. Ignore taxation.
The company requires that certainty-equivalent cash flows have a positive NPV at a discount rate of 5%. Adjustment factors to arrive at certainty-equivalent amounts are as follows.
Year
1 2 3 4
Costs Benefits
1.1 0.9
1.3 0.8
1.4 0.7
1.5 0.6

Required
Assess on financial grounds whether the project is acceptable.