Webb Ltd. is contemplating investing in a machine for its manufacturing processes. The machine will be used to manufacture a product known as "Omega". The company has undertaken market research at a cost of KES 12 million in order to forecast the future cash flows of the investment project. The machine will cost KES 50 million and will incur installation costs amounting to KES 5 million. The machine is expected to have a useful economic life of 5 years and a resale value of KES 10 million at the end of this period. Acquisition of this machine is expected to cause changes in working capital at the beginning of the expected life of the machine. Inventory balances are expected to increase by KES 12 million, accounts receivable will increase by KES 12.5 million, accounts payable will increase by KES 11.5 million, accrued expenses and prepaid expenses are expected to decrease by KES 10.5 million and KES 10.4 million respectively. The net change in working capital will be recovered at the end of the machine's economic life. The quantity of "Omega" expected to be manufactured and sold in each year will be as follows: Yea r 1 l 2 l 3 4 5 l Quantity manufactured and sold (Units) 400,000 l 380,000 l 350,000 300,000 270,000 l Additional information: 1. Each unit of "Omega" is expected to be sold at KES 100 in year one. However, the price is expected to increase by 10% annually thereafter. 2. The variable cost per unit for "Omega'1 is expected to be KES 20 in year one. In subsequent years, this cost is expected to increase by 6% annually thereafter. 3. Fixed costs per annum excluding depreciation are estimated at KES 10 million. The company provides depreciation using the reducing balance method at the rate of 30% for all its fixed assets and pays corporate tax at the rate of 30% one year in arrears. 5. The company's cost of capital is 15%. Required: a) Calculate the net cash flows for the investment proposal. (10 Marks) b) Calculate the NPV of the project and advise if it's financially acceptable to Webb Company. (2Marks) c) Calculate the IRR of the project and advise on its financial acceptability to Webb Company. (3 Marks) d) Advise the directors of Webb Company on methods they can use to maximize shareholders' wealth. (5 Marks)