4. A company is considering an investment project which requires an initial cash outlay of

`5,00,000 on equipment and `20,000 as working capital. The project’s economic life is 6 years. An additional investment of `50,000 each would be necessary at the end of second and fourth year to restore the efficiency of the equipment. The annual cash inflows expected from the project are:

Year 1 2 3 4 5 6 Cash inflows (`) 80,000 1,20,000 1,80,000 2,00,000 2,60,000 3,00,000 If the realizable scrap value of the equipment is `20,000 after 6 years and cost of capital is 20%, justify whether the project should be accepted or not by determining the NPV.
Assume that the working capital will be recovered at the end of the project life.