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You are CEO of Rivet Networks, maker of ultra-high performance network cards for gaming computers, and you are considering whether to launch a new product. The product, the Killer X3000, will cost

$897,000

to develop up front (year 0), and you expect revenues the first year of

$808,000,

growing to

$1.43

million the second year, and then declining by

40%

per year for the next 3 years before the product is fully obsolete. In years 1 through 5, you will have fixed costs associated with the product of

$93,000

per year, and variable costs equal to

50%

of revenues.

a. What are the cash flows for the project in years 0 through 5?

b. Plot the NPV profile for this investment using discount rates from 0% to 40% in 10% increments.

c. What is the project's NPV if the project's cost of capital is

9.1%?

d. Use the NPV profile to estimate the cost of capital at which the project would become unprofitable; that is, estimate the project's IRR.

You are CEO of Rivet Networsmaker of performance network card for gaming.com, and you are considering whether to launch a new product. The product, traileloo will be 27.000 deep forward you expect rovers the first year of 500,000.growing to $143 milion the second year, and rendering by 40% per year for the next 3 years are the role in though you will feed cost the product of $3,000 per year, and variable costs was of revenues What are the cash flows for the project in years tough 37 b. Pof NPV profile for the investment using discounts from OS to 40% 10% increments d. Use the NP problemate the cost of capital with the project would become that is the project a. What are the cash flow for the project in your though? Calvi the cash flows below. Round to the rear) 1 Rev YOY 1 2 800.000 1.450,000 775 40 140%) 40%) son 50 FO wel 7.000 I. PoftheNow that sing door om 100% 10mm The Inflect the bed b. Plot the NPV profile for this investment using discount rotes from 0 to 40% 10% increments The graph depicting the core NPV profile is (Select the best choice below) OB NPV Pro NPVP 500.000 ON 6. What is the NPV the cost of capital 9117 The Now c. What is the project's NPV the project's cost of capital is 8.1? The NPV I (Round to the nearest dolar) d. Use the NPV profile to estimate the cost of capital which the prospect would become profitable that is there for a room in on the NPV profile, lick here Based on the NPV pot the matemal rate of rotun O Round to the nearest inope Enter any number in the edit fields and then continue to the

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