Imagine that your FTSE $100$ company Astra zeneca which you analyze, is considering a new project to develop a new physical product $($therefore$,$ it is depreciated$).$

$$ Assume that their initial investment is $2,000,000$ and that the first$-$year cash flow is $100,000.$

$$ This project will last five years, and at the end of the fifth year, it will have a terminal value of $350,000.$

$$ The cash flows will grow at a constant rate of your choice$/$decision; please specify your choice.

$$ The relevant tax rate is $20\%.$

$$ The project is depreciating in a straight$-$line depreciation, fully finishing depreciation by the end of the fifth year.

$$ There won't be any advertising costs.

Required:

a$)$ Calculate the net cash flows.

b$)$ Estimate or find the company's beta and the company$$s cost of capital $($using CAPM and research$/$find suitable values for the risk$-$free and market rates$).$

c$)$ Calculate the company's WACC using its debt$/$equity ratio, which you can find$/$calculate from its financial statements. Show reasoning and$/$or calculations for the cost of debt and equity used in your calculations.

d$)$ Calculate the NPV$,$ IRR and PI of the project using the company's WACC as a discount rate.

e$)$ Make a recommendation: should the investment be accepted?

f$)$ Calculate your company$$s enterprise value.