Oodles plc is a toy manufacturer. The company has developed a new mini-laptop for children aged 4-6 years old and management is now thinking about launching it on the market. Costs to develop the min-laptop totalled 3 million. Details that management has gather follow. i. The company will manufacture its new product at a factory that has spare capacity. The factory was acquired five years at a price of 6 million and is currently valued at 9 million, The company will need to install new machinery for the manufacture of the mini- laptops at a price of 6 million. Payment for the machinery will be settled in two equal instalments, one now and the other in six months' time. The equipment has a production capacity of 100,000 units and a useful life of six years, at the end of which it will be sold for an estimated value of 600,000. Demand for the product which is expected to last for the next six years has been forecast at 60,000 units per annum at a price of 80.00 per unit. iv. Variable costs per unit and fixed costs per annum (inclusive of depreciation on a straight line basis) have been estimated at 24.00 and 1.5 million, respectively. In addition, head office costs are expected to rise by 200,000. In accordance with the company's overhead cost allocation policy, a charge of 400,000 will be applied to the project. vi. The company will require a working capital investment of 20% of its annual sales at the start of the project. 90% of this will be recovered at the end of the project. The project will be financed by a combination of debt (40%) and equity (60%). The costs of debt and equity have been estimated at 6% and 16%, respectively, generating an overall cost of capital for the project of 12%. The annual interest charge on the debt acquired to fund the project is 350,000. REQUIRED: (a) Advise management whether the project is worth the company's while. (16 Marks) (b) The company can improve its sales volume by 20,000 units if it drops the price of the product to 68.00 per unit. Assess for the management of Oodles plc whether this is a strategy worth pursuing. (8 Marks) (c) Discuss the limitations of your calculations and advice in (a) and (b) above. (9. Marks)