SG Printing Limited is evaluating whether it should invest in new equipment that cost $1,000,000. With this investment, it will generate an additional $500,000 revenue annually, while its costs will increase by additional $200,000 annually.

The equipment is to be fully depreciated in five years using the straight-line depreciation method. The firm would need an additional net working capital of $100,000.

Given that the firm's cost of capital is 8% per annum and its tax rate is 20%, calculate the following:

(1) Calculate is the INITIAL INVESTMENT of the above equipment

(2) Calculate the annual OPERATING CASHFLOWS of the equipment

(3) Suppose the firm can sell the equipment for $100,000 at the end of five years. Calculate the TERMINAL CASH FLOW of these equipment

(4) Calculate the NET PRESENT VALUE of the above investment.

Explain whether the firm should go ahead with the purchase of the equipment