1. Calculate the projects NPV, IRR, MIRR and Payback period. Should the project be accepted?

The background to these question is: .

After several months, they felt Central should go ahead with the project. They would set up production in an unused section of their main plant. New machinery with an estimated cost of $2,100,000 would be purchased. Shipping would cost $150,000 and there would be an additional charge of the same amount for installation. Inventories would increase by $75,000 and receivables would increase by $125,000. The machinery was estimated to have a useful life of four years. Depreciation would be on the Modified Accelerated Cost Recovery System (MACRS) with allowances of 33%, 45%, 15% and 7% for the four years of its useful life. The machinery is expected to be sold after four years for $150,000. The company had been thinking about leasing the unused portion of the factory that is scheduled to be used for the new project. They had received several interesting offers, the most favorable of which was for $20,000 per year. Annual sales of the new product were estimated to be 150,000 cases at $35 per case. Costs, excluding depreciation, would be 80% of sales. It was felt that existing sales would be cannibalized by $20,000 per year.