Problem $2$

Happyville is considering the purchase of new equipment that will cost $$\mathrm{.}525$ million if purchased today and will generate the following cash inflows and outflows:

Year

Receipts

Cash Expenditures

$1$

$$750,000\mathrm{.}00$

$$500,000\mathrm{.}00$

$2$

$$775,000\mathrm{.}00$

$$525,000\mathrm{.}00$

$3$

$$775,000\mathrm{.}00$

$$525,000\mathrm{.}00$

$4$

$$800,000\mathrm{.}00$

$$550,000\mathrm{.}00$

$5$

$$875,000\mathrm{.}00$

$$625,000\mathrm{.}00$

The cost of capital is $6\mathrm{.}00\%$ annually. Reinvestment rate is $2\%.$

Questions: Calculate NPV$,$ IRR, MIRR, BCR$,$ and Payback of the project. Should Happyville pursue this investment?