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Conch Republic Electrics locates in Key West, Florida. ThePresident is Shelley Couts, who inherited the company. The companyis a reputable manufacturer of various electronic items. JayMcCanless, a recent Business graduate, has been hired by thecompany’s finance department.One of the major revenue producing items manufactured by ConchRepublic is a Personal Digital Assistant, PDA. Conch Republiccurrently has one PDA model on the market, and sales have beenexcellent. However, as with any electronic item, technology changesrapidly, and the current PDA has limited features in comparisonwith newer models. Conch spent $750000 to develop a prototype for anew PDA that has all the features of existing PDA but adds newerfeatures which market demands. The company has spent a further$200000 for a marketing and sale promotion.Conch republic manufactures the new PDA for $150 each invariables costs. Fixed costs for the operation are estimated to run$4.5 million per year. The estimate sale volume is 70000, 80000,100000, 85000, and 75000 per each year for the next four years,respectively. The unit price of the new PDA will be $340. Thenecessary equipment can be purchased for $16.5 million and will bedepreciated on a seven-year MACRS schedule. It is believed thevalue of the equipment in five years will be $3.5 million. Networking capital for the PDAs will be 20% of sales and will occurwith the timing of the cash flows for the year. Conch Republic hasa 35% tax rate and 12% required return.Shelley has asked jay to prepare a report that answers thefollowing questions:What is the IRR of the new project? (10%)What is the NPV of the new project? (10%)Challenge Part of Case #2Production of the existing model is expected tobe terminated in two years. If Conch republic does not introducethe new PDA, sales will be 80000 units and 60000 units for the nexttwo years respectively. The price of the existing PDA is $ 280 perunit, with variable costs of $120 each and fixed costs of $1800000per year. If Conch Republic dose introduce the new PDA, sales ofthe existing PDA will fall by 15000 units per year, and the pricewill have to be lowered to $240 each. Consider this change ofoperation cash flows,What is the NPV of the new project? (10%)