You are analyst of a company and required to provide recommendation on new project. * Show all working The R&D cost done is $100 million. Product can be put of market beginning of next year (Year 1) and company expect it to stay on market for 5 years.(from year 1 - year 5) The Intial Investment occurs immediatedly (year 0) and operation cash flows at beginning of next year. (Year 1) Company must Intially invest $ 10 million in production equipment. This quipment can be sold at $6 million at the end of year 5. Company except to Sale for $100 per unit, variable cost is $55. Marketing and Advertising cost is $30 million in the first year. Both Selling and cost (variable and marketing) are expected to increase at the inflation rate in the subsequent years. (year2 - 5) Corporate rate is 43.5% and Inflation rate 4.75% constant over the life of Project. Floowing Sales Target are First year- 50 Million,Second year 40 Million and 30 Million for year 3 - 5. Equipments are depreciated in Straight Line method over 5 Years to Zero balance. The Immediate initial working capital requirement is $10 million in year 0 and at the end of year5, company will get all working capital back. Assume 10% discount rate is appropriate. Questions:- 1 a) Calculate the incremental free cash flow during the project's life (starting from Year 0 to Year 4). Show workings. b) Calculate the NPV, payback period and IRR of the project. Should the project be accepted based on NPV rule? Show workings and explain your answer(s).