To calculate the profits for each year, subtract the total costs from the sales. Materials, labour, other variable overheads, fixed overheads, other operating costs. Taxes are calculated as 28 percent of profit before tax which is the difference between sales and all other costs except taxes.

Particulars	Year 1	Year 2	Year 3	Year 4	Year 5
Sales	R36,750.00	R54,023.00	R61,586.00	R69,770.00	R70,451.00
Less: Material	R5,885.00	R9,075.00	R11,979.00	R14,714.00	R14,495.00
Less: Labour	R11,770.00	R18,150.00	R23,958.00	R30,746.00	R28,989.00
Less: Variable OH	R525,00	R662,00	R752,00	R851,00	R957,00
Less: Fixed OH	R5,250.00	R5,513.00	R5,788.00	R6,078.00	R6,381.00
Less: Operating Costs	R3,120.00	R3,353.00	R3,600.00	R3,978.00	R4,015.00
Profit Before Tax (PBT)	R10,200.00	R17,270.00	R15,509.00	R13,403.00	R15,614.00
Less: Tax @ 28%	R2,856.00	R4,835.60	R4,342.52	R3,752.84	R4,371.92
Profit After Tax (PAT)	R7,344.00	R12,434.40	R11,166.48	R9,650.16	R11,242.08

1. Weighted average cost of capital. (WACC)

The average cost that a company incurs to fund its assets is called the weighted average cost of capital, or WACC. WACC considers both the cost of equity and the cost of debt and assigns them weights based on their share in the capital structure. WACC is a measure of how profitable a company or a project is, by comparing it with the required return. WACC is also the discount rate for future cash flows in discounted cash flow analysis. (Shakir, 2021)

Step 1:Given information

Equity market value: R75 million

Debt market value: 75 million

Equity beta: 1.2

Tax rate 28%

South African Treasury bill: 5%

The market risk premium 7.5

After tax cost of debt: 6%

STEP 2: Determine cost of debt.

Formula for cost of debt:

K_{d = cost of debt}

I = interest rate payable

t = tax rate

Computation of cost of debt

K_d = I (1 t)

=K_d = 6% (1- 0,28%) = 0,0432

= 0,0432 X 100

= 4,32% Cost of debt

STEP 3: Determine cost of equity

Formula for cost of equity:

Re = the required return of equity

Rf = the risk - free rate

= Beta

Rm = return on market premium

Computation of cost of equity:

Re = Rf + (Rm - Rf)

=0.05 + 1.2 (0.075 0,05) = 0,08

= 0,08 x 100

= 8%

STEP 4: Determine WACC

Source	Cost	Weightings	WACC
Equity proportion	8%	75%	6 % (8 X 75%)
Debt proportion	4,32%	25%	1,08% (4,32 X25%)
WACC		100	7,08%

Based on the provided information, the Weighted Average Cost of Capital (WACC) for Phambili Ltd is calculated to be 7.08%.

Determine IRR discounting rate for cashflows.