24 CPC is considering introducing a new product unto the market. This will require the injection of huge capital to the tune of GHe 20,000 for the purchase of the equipment for production. The firm will put GH6,000 down and finance the remaining GHe 14,000 from a loan. The firm's opportunity cost is 12% for the GH6,000 and 8% for the GH14,000 loan. The successful implementation of this will generate additional cash flows into the business. The Production and Marketing department has presented the information in the table below: Variable cost per unit of the product 2015 GHe2 Selling price per unit Quantity Again the following information should be taken not of: Feasibility studies cost the company GHe2000 Variable cost will increase by 5% per annum Selling price will increase by 10% per annum GH6 4000units per annum Marketing expense will be 5% of sales revenue per year Overhead cost will be fixed at GH6000 per year The project will last for five years (2016-2020) and the machines will be sold for a scrap value of GHC4000 Charge depreciation using the straight-line method Required: CPC falls within the 25% tax bracket The project will be financed with debt and equity Using incremental cash flows, calculate; c. The gross profits for 2016-2020 d. The Net Profits after tax e. The free cash flow f. Calculate the WACC for the project g. Evaluate the project using NPV Page 12 of 33