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14 Arcadia Ltd is considering investing in a project which requires an initial outlay of $800 000. The project will last for four years and will have a net cash inflow of $235 000 at the end of the first year and this is expected to rise by 10% every year until the end of its useful life. The company's cost of capital is 8% Extract from the present value tables for $1: Year 1 2 3 4 5 8% 0.926 0.857 0.794 0.735 0.681 235000 258500 284350 Required (a) Calculate the net present value of the project at the company's cost of capital and advise the directors whether the project is acceptable or not (b) Determine the payback period