S] Phambili Ltd is in the pharmaceutical industry sector and has been expanding in the recent past due to a change in its strategic direction from regulated medicines to supplements and homeopathic remedies. The company has recently identified a project it wants you to evaluate and give recommendations on whether to reject or accept, among other things. You are provided with the following tabulated financial and additional information: Details Year 1 Year 2 Year 3 Year 4 Year 5 R000 R000 R000 R000 R000 Sales 36,750 54,023 61,586 69,770 70,451 Materials 5,885 9,075 11,979 14,714 14,495 Labour 11,770 18,150 23,958 30,746 28,989 Other variable overheads 525 662 752 851 957 Fixed overheads 5,250 5,513 5,788 6,078 6,381 Other operating costs 3,120 3,353 3,600 3,978 4,015 Additional information: The tax rate is 28% and is payable in the year profits are made; The company is financed by 75% equity and 25% debt, with market values of R75-million and R25-million respectively. The company has an equity beta of 1.2. The rate on South African Treasury bills is 5% and considered to have no risk. The market risk premium is 7.5%. The companys after-tax cost of debt is 6%; Profits are similar to cash flows for the purposes of this project evaluation; and All receipts and payments arise at the end of the year to which they relate except for the projects initial outlay of R30-million, which is paid at the beginning of the project (ie, immediately)