Mr Lima is considering installing an irrigation system on his farm at a cost of R$18000$ per hectare. The irrigation system will be finances using equity capital and is expected to increase his real annual net cash flow after tax by R$4000$ per hectare over the six$-$year life of the investment. Mr Lima expects to reinvest returns from the investment at a nominal $12\%$ rate of return.

$($a$)$ Evaluate the profitability of the proposed investment using the Modified Internal Rate of Return $($MIRR$)$ method of capital budgeting. Assume that the expected average rate of inflation is $5\%$ per annum. Show all workings. $(5)$

$($b$)$ What other factors should Mr Lima consider when deciding whether or not to proceed with this investment? Briefly explain your answer. $($