Question $3[9$ Marks$]$

A print company is considering expanding into the growing laser copier business. The company estimates that this expansion will cost R$1\mathrm{.}8$ million and will generate a $20-$year stream of expected net cash flows amounting to R$300000$ per year. The company$$s weighted cost of capital is $12$ percent.

Required:

$3\mathrm{.}1.$ Calculate the net present value of the laser copier project using the company$$s weighted cost of capital and the expected cash flows from the project. $(3)$

$3\mathrm{.}2.$ Using the risk$-$adjusted discount rate approach, management has decided that this project has substantially more risk than average and has decided that it requires a $20$ percent expected rate of return on projects like this. Recalculate the risk$-$adjusted net present value of this project. $(3)$

$3\mathrm{.}3.$ Should the print company accept this project? What is the meaning the NPV result? $(3)$