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Part $1$

Your factory has been offered a contract to produce a part for a new printer. The contract would last for three$$ years, and your cash flows from the contract would be $ $5\mathrm{.}23$ million per year. Your upfront setup costs to be ready to produce the part would be $ $7\mathrm{.}82$ million. Your discount rate for this contract is $7\mathrm{.}8\%.$

a$.$ What does the NPV rule say you should$$ do$?$

b$.$ If you take the$$ contract, what will be the change in the value of your$$ firm?