Crown PLC is assessing an investment proposal to manufacture drones which will require an initial investment of 20,000. The sales of the drones (ignoring taxation) forecasted as follows: Year 1 2 3 4 Sales(units/year) 250 350 500 300

The selling price of the drone (in current price terms) will be 150 per unit, while the variable cost (in current price terms) will be 100 per unit. Existing fixed costs will not increase since Crown PLC has spare capacity. The forecast selling price inflation is 3% per year, the forecast cost inflation 4.5% per year. The level of working capital investment at the start of each year is expected to be 7% of sales revenue in that year. No scrap value is expected at the end of four years, when the production of drones is expected to end. Crown PLC uses a nominal (money terms) discount rate 11%. Calculate the net present value of the planned investment using a nominal (money terms) cash flows and comment on whether it is financially acceptable.