QUESTION TWO $[25]$You are the recently appointed Financial Manager of Duba Ltd$,$ an all$-$equity funded company. Fourindependent, indivisible projects $($which have similar risk to the companys current product mix$)$ arecurrently under consideration. The companys funding for capital projects is limited to R$1200000.$Implementation of the projects cannot be delayed and the company has a strict no borrowing policy.Your predecessor had calculated the following $($which you may assume to be correct$)$:Project Capital Outlay NPV ProfitabilityIndexDiscountedPayback$1200000299261,152,462400000337271,082,973850000813481,102,714500000???$The company has just paid a dividend of R$10$ per share. The growth rate has been calculated to be$10\%.$ The current share value is R$100.$ Details pertaining to project $4,$ which has a life of four years,are as follows:$1.$ Estimate sales units are:Year $11000$Year $21050$Year $31100$Year $411502.$ Unit contribution is R$300,$ which will remain consistent over the four year period$\mathrm{.}3.$ The company has a policy of apportioning a general fixed overhead charge of R$10$ per unit toeach product sold. Specific annual fixed costs for project $4$ are R$50000$ per annumcommencing in Year $1\mathrm{.}4.$ At the commencement of the project $($Year $0),$ a machine costing R$500000($which has usefullife of $5$ years$)$ will be acquired and written off on a straight line basis at $20\%$ per annum,ignoring any expected disposal value. At the end of year $4,$ the machine will be sold forR$50000\mathrm{.}25.$ Additional net working capital requirements will be R$30000$ in year $1,$ plus R$30000$ in year $2.$No further increases in working capital are anticipated in Year $3$ and Year $4\mathrm{.}6.$ Immediate $($i$.$e$.$ Year $0)$ stock requirements are available from existing stock, which if used forproject $4,$ will not be replaced. Should project $4$ be rejected, then this stock will be soldimmediately for R$20000.($Note: any tax implications pertaining to the sale of this stock maybe ignored$).$Duba Ltd is in a tax$-$paying position. The tax rate is $30\%$ and there is no time lag in the payment oftaxes $($i$.$e$.$ taxes are paid in the year profits accrue$).$ You may ignore inflation and the opportunitycost of capital implications of rejecting any of the four projects. Assume all cash flows occur at theend of the relevant year, unless stated otherwise.Required:$2\mathrm{.}1$ Calculate the appropriate discount rate for Duba Ltd when evaluating its capital expenditureprojects. $(4)2\mathrm{.}2$ For project $4,$ calculate its:$($i$)$ Net Present Value $($NPV$)(8)($ii$)$ Profitability Index $($PI$)(2)($iii$)$ Discounted Payback $($DPB$)(2)2\mathrm{.}3$ Given Dubas capital rationing circumstances, determine what you consider to be Duba Ltdsoptimal selection of the projects under review. Your answer should include a discussion of themethods used, and the appropriate method of determining the optimal solution.