Meltek Industries is evaluating a project whose expected cash flows are as follows Year Cash flow (in Rs. thousands). -1,100 200 O-Nm 500: 600 250 The firm employs NPV method for its capital budgeting decisions. As the project under consideration pertains to an expansion investment, the firm decides to incorporate risk in the decision process. - Compute the NPV of the project and state your recommendation using : (a) 'Risk adjusted discount rate (b) Certainty equivalent method The risk-free rate of interest is 8 per cent. The cost of capital for the fitm is 12 per cent and . the firm believes that an adjustment to the tune of +3 per cent is required as differential risk for such projects. The certainty equivalent coefficients for years 1, 2, 3 and 4 are 0.9, 0.8, 0.7 and 0.6, respectively. (10+10 marks)