Question 4 (19) Farmers Friend (Pty) Ltd is a supplier of products to the agricultural industry. The company wishes to add a surveillance drone to its product range. The drone will enable farmers to survey and manage remote areas on their farms. Formers can also use the drone for security purposes The most suitable drone available in the market requires an initial investment of R520 000, all costs included The project team responsible for investigating and making a recommendation about this new product's feasibility and profitability provided the following information and requested your assistance with the feasibility study: Year Net cash flows R380 000 R 355 000 R300 000 #Note: Cash flows need to be adjusted for a wear and tear allowance and taxation 1 2 3 Additional information: Owing to rapid technology development, the company believes that the drone will have no value at the end of three years The company's current weighted average cost of capital is 15%. The corporate tax rate is 28%. Wear and tear allowances for years 1, 2 and 3 are 50%, 30% and 20%, respectively Required: Round off all calculations to the nearest rand. Apply the net present value (NPV) technique to assess the viability of the acquisition of the surveillance drone and use the results of the analysis to make a recommendation to management. The cash flows must be adjusted for the effects of the wear and tear allowance and taxation. Support your recommendations with practical reasons