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

Umdloti 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:

Year $1$ R$350000$

Year $2$ R$750000$

Year $3$ R$200000$

Year $4$ R$170000$

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