$6\mathrm{.}2$ Manitoba Railroad Limited $($MRL$)$ is considering spending $$522$ million to add new locomotives and

train cars. It is estimated that the trains will last $15$ years and have an estimated salvage value of $$50$

million at the end of $15$ years. Expected annual revenue increases before depreciation for the first

five years are $$75$ million, for the next five years are $$50$ million, and for the last five years are $$40$

million. MRL$\text{'}$s cost of capital is $7\%.$

Required:

$($a$)$

$($i$)$ Accounting rate of return

$($ii$)$ Payback period

$($iii$)$ Net present value

Calculate: $($iv$)$ Internal rate of return.

$($b$)$ State, with reasons, your recommendation to MRL concerning implementation of this project.