Please help, confuse with this question(Variable Costing and Marginal Costing).

You are the Financial Director of AntWorks Ltd. and you are considering the following investment projects.
1. Project Sugarie:
AntWorks Ltd.’s R&D department has tested a new product, Sugarie, which has shown promising results. The information relevant to this project is as follows:
i. A new equipment will have to be imported at a total cost of USD 0.538 million. The equipment is expected to be used for 4 years, which is Sugarie’s expected product life. At the end of the project the equipment shall be disposed at 10% of its original cost in Rs.. For income tax purposes Antworks Ltd. can charge annual allowance at the rate of 30% of the written down value of the equipment.
ii. The demand for Sugarie will depend on the state of the economy.
• In the boom state AntWorks Ltd. expects to sell 1.5 million units in the first year and with potential to increase by 15% per annum over the next 2 years. Sales will drop to 0.7 million units in the final year. The probability that the economy booms over the next 4 year is estimated to be 0.35.
• Analysts believe that there are 25% chance that the economy contracts. In such situation sales will be 0.5 million units per year, with no expected growth.
• Otherwise, if the economic conditions remain stable, sales will be at 1 million units in year 1 and will grow at the rate of 5% in the second year and will start to contract by 20% per annum in the third and fourth year.
Analysts anticipate the above three possible economic scenarios only.
iii. Antworks Ltd. will have to maintain one month of inventories at start of every financial year. Other working capital requirement is expected to be 10% of the forthcoming year’s expected contribution.
iv. Each unit of Sugarie will be priced at Rs.40. Total variable costs per unit are expected to be Rs.25 for the first year. Incremental fixed cost associated with the project is expected to be Rs.7 million during the first year. The R&D and marketing departments have already incurred Rs. 0.5 million during the testing phase. Annual marketing expenses are expected to be Rs. 0.5 million (as valued in year 1), that is, irrespective of the economic condition.
v. The Customer Price Index (CPI) is expected to increase at 5% per annum over the next three years after year 1. That is irrespective of the state of the economy. However, selling price will not be indexed to the annual CPI but will be increased at 4% per annum.
Other investment projects:
Your colleagues have calculated the annual operating cash flow for two other investment projects which are given below:
Projects:
Figures in Rs. Million Year 1 Year 2 Year 3 Year 4
Apple-pie 12 5.5 3.7 –
Sour-Salt 4.5 3.5 2.0 1.0

Apple-pie and Sour-Salt require an initial investment at the start of the project of Rs. 17 million and Rs. 10 million respectively. There exist a second-hand market for the investment required by Apple-pie and this will generate Rs. 1 million upon disposal.
None of the above projects are divisible and can be postponed.
Financing and other market information
Antworks Ltd. has a debt-to-equity ratio of 2:1, with 50 million Rs. 1 ordinary shares and a beta factor of 1.2. The above projects have got an equity beta of 1.3. To finance future investment projects, you are expecting to:
1) do a right issue of 1 for 5 share at a discounted price Rs. 2.59 per share, and
2) issue 12% irredeemable debenture of Rs. 12 million.
Analysts believe that the shares and debentures will be fully subscribed.
Treasury bills provide a return 4% per annum and the market rate of return is at 10%.
The prevailing spot exchange rate is 0.02690 Rs./USD.
Income tax is charged at 15%, payable one year in arrears.
Required:
Prepare a report which:
i) Advise the board on the:
a. feasibility of the above investment projects, and
b. risks that you can foresee through sensitivity analysis.