Problem:

Fox Enterprises is considering expanding into the growing laser copier business. Fox estimates that this expansion will cost $1.8 million and will generate a 20 year stream of expected net cash flows amounting to $400,000 per year. The company's weighted cost of capital is 15%.

Required:

Question 1: Compute 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.

Question 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 24 percent expected rate of return on projects like this. Re-compute the risk-adjusted net present value of this project.

Note: Please provide through step by step calculations.