below. Question 1 1. Dodo Clothes Inc. is a company based in Mauritius that specializes in the manufacturing of women's summer wear. The company is now considering to expand the business by manufacturing men's summer wear as well. Before proceeding with the new project, Dodo Clothes Inc. decides to conduct a research to gauge the demand for men's summer wear in the Mauritian market. The research, which had cost the company a sum of Rs 1o 000, showed that demand was high. As such, the CEO of the company decides to verify whether the project will be profitable or not. To do so, the latter collects the following information: a. New machinery worth Rs 4 million will be required to produce the men's wear. This includes shipping costs and installation costs. b. The new machinery has a useful life of 8 years and a salvage value of Rs 0. c. An initial net working capital investment of Rs 550 000 will also be required when the company purchases the equipment. d. The project's economic life will be 5 years. e. The market value of the equipment will be at Rs 1.2 million in 5 years time. f. Revenue for the first year of this project is expected to be Rs 5 million and this is expected to increase at a rate of 8 % per year through year 5. g. The manufacturing costs are expected to amount to Rs 2 million in the first year and to increase by 5 % every year through year 5. h. Dodo Clothes Inc. also has rent of Rs 500 000 every year for the building where they will manufacture the men's wear. a. If the tax rate of Dodo Clothes Inc. is 20% and its cost of capital is 15%, i. find the initial investment outlay ii. find the operating after-tax cash flows iii. find the terminal year after-tax non-operating cash flow iv. recommend whether Dodo Clothes Inc. should go ahead with the project or not? Clearly Justify your answer. b. If Dodo Clothes Inc. finances the expansion project with a debt of Rs 3 million, critically discuss and illustrate the possible implications on the net present value calculations of the project