REQUIRED

$4\mathrm{.}2$ Study the information given below and determine, based on its Net Present Value $($NPV$),$ whether the investment should be favourably considered for acceptance or not.

INFORMATION

Lotto Ltd plans an investment in non$-$current assets costing R$3000000.$ The non$-$current assets are expected to have a four$-$year life, with the following net profits anticipated:

$\begin{array}{cc}\text{Y}\text{e}\text{a}\text{r}1& R350000\\ \text{Y}\text{e}\text{a}\text{r}2& R750000\\ \text{Y}\text{e}\text{a}\text{r}3& R200000\\ \text{Y}\text{e}\text{a}\text{r}4& R170000\end{array}$

Working capital amounting to R$200000$ will be required at the start of the project. All the working capital will be recovered at the end of year $4.$ The expected scrap value of the non$-$current assets is R$400000.$ The cost of capital is $12\%.$ Ignore taxes.