please help question a and b

L UI O Pine Ltd has spent Tshs 20 million researching the prospects for a new range of products. If it were decided that production is to go ahead an investment of Tshs 240 million in capital equipment on January 1, 2015 would be required. The accounts department has produced budgeted profit and loss statements for each of the next five years for the project. At the end of the fifth year the capital equipment will be sold and production will cease. The capital equipment is expected to be sold on December 31, 2019 for Tshs 40 million. 31/12/2015 31/12/2016 31/12/2017 112/2018 31/12/2019 Sales 400 400 Materials 240 2.40 192 Other variable costs Fixed overheads Depreciation Net profit (loss) (All figures are in Tshs million) When production is started it will be necessary to raise material stock levels by about Tshs 30 million and other working capital by Tshs 20 million. It may be assumed that payment for materials, other variable costs and fixed overheads are made at the end of each year. Both the additional stock and other working capital increases will be released at the end of the project. Customers receive one year's credit from the firm. The fixed overhead figures in the budgeted accounts have two elements - 60 percent is due to a reallocation of existing overheads: 40 percent is directly incurred because of the take-up of the project. For the purposes of this appraisal, you may regard all receipts and payments as occurring at the year end to which they relate, unless otherwise stated. The company's cost of capital is 12 percent. Assume no inflation or tax. a) Use the net present value method of project appraisal to advise the company on whether to go ahead with the proposed project b) Explain to a management team unfamiliar with discounted cash flow appraisal techniques the significance and value of the NPV method