Capsule Inc. a major pharmaceutical company is considering expanding its product line to include a new drug Zika Virus Vaccine. Given your knowledge of project evaluation you have been asked to review the financial data below and make a recommendation as to accept or reject the project. Prepare a brief report with your recommendation to present to the board of directors. Provide a justification for your recommendation and any. Explain in detail why the board should accept or reject the project. Your report must contain documentation supporting your recommendation and justification for any assumptions that you make regarding the data or any calculation that you perform.

	Year
MARCS Depreciation Rates		1	2	3		4		5		6
Building		1.5%	3%	3%		3%		3%		3%
Equipment		20%	32%	19%		12%		11%		6%
	Land						Building		Equipment
Initial Cost	1,200,000						8,000,000		10,000,000
Depreciable Basis	0						8,000,000		10,000,000
Salvage (Ending Market) Value	1,700,000						6,680,000		2,000,000
Unit Sales (lots of 1000) Year 1	1,530
Unit Sales Price Year 1	24,000
Inflation Rate	3%
Variable Cost					% of Net Sales
Raw Materials					15%
Energy					10%
Labor					10%
Advertising					45%
Total									80%
Fixed Cost (overhead)	8,000,000
Working Capital	10% of Net Sales
Debt to Equity Ratio	0.4
Bond Interest Rate	2%
Tax Rates*	35%
Sales Growth Rate Projection	15% / Year
*Assume corporate capital gains are taxed at the same rate as ordinary income. This applies if the salvage or ending market value is greater than the book value. If the salvage or ending market is less that the book value, a capital loss would be incurred and a tax credit would be due and would be represented as a cash inflow.