Question 1 (20 marks) AEKI Ltd is a listed company that has designed a DIY bed furniture that can easily be assembled by homeowners. The company designed this at a cost of R500 000 . The company is yet to deduct this cost for tax purposes. The company does not sell any other products. The selling price of the furniture will be set at R2 000 per unit and the variable production cost per unit is R2 500. The company expects to sell 2500 units per year. The fixed costs (excluding the accounting depreciation) will amount to R2 000000 per year. Plant and equipment, which will be used in the production of furniture, was purchased at a cost of R1 800000 . Plant and equipment are expected to have an effective useful life of five years. The new equipment qualifies for the section 12C "depreciation deduction"' (tax depreciation) of 20% of cost in the first year and 10% of cost in each of the remaining years. The equipment is expected to have a residual value of R400 000 (the asset will be sold at R400 000) at the end of the five years. The cost of capital for the company is 15% and the corporate tax is 28%. The cost of capital for the project is 12% Indicate whether AEKI Ltd. should invest in the current potential investment. Use the net present value techniques to come to your conclusion. Show all calculations as marks are awarded for calculations. Provide reasons for any amount excluded