(Note the tax rate of 27% throughout the remainder of the examination paper.) Sparks Ltd is a recently formed company aiming to provide alternative energy solutions to a broad market. The company currently imports and sells primarily foreign-built solutions; however, it is in the intermediate stages of planning to build its own local assembly line. The most favoured plan amongst management is to purchase components overseas and then to assemble inverters, solar panels, and battery packs locally, which will require an initial investment of R30 000000 . Based on the sales of the current imported equipment and the expected cost of local assembly, the company expects sales generated by the plant as follows: E Cost of sales is expected to amount to 70% of sales, and the initial investment will be written off over five years using the straight-line method for tax purposes. At the end of the project in year 6, it is planned that the company will transition to full-fledged local manufacturing and sell the plant for an expected amount of R10000000. The corporate tax rate is 27% and all values provided are in nominal terms. Sparks Ltd uses its WACC of 11% as a discount rate but adds a risk premium based on the coefficient of variation (CV) of the project's expected cash flows. The plant project has a CV of 0.6 associated with its cash flows. The risk premium is allocated as follows: - 0.6 WACC if the CV is less than 0.4 - 1 WACC if the CV is equal to or greater than 0.4 but less than 0.6. - 2 WACC if the CV is equal to or greater than 0.6. An increase of R11 000000 in net working capital is expected for the project and it is expected that R11 000000 in net working capital will be recouped at the end of the project. Required: Calculate the NPV of the project and comment on the acceptability, profitability, and risk of the project. Note: All values provided are in nominal terms