Calculate the net present value and investor's rate of return in Example 19.1 if the product life cycle is extended from three to five years. All other input data remain unchanged.

Data From Example 19.1:-

The marketing team of the home appliances company submits a three-year sales projection to management. It is expected that 50,000 units of the air purifier can be sold per year at \($300\)∕unit. An annual advertising budget of \($2.5MM\) is proposed. The engineering team estimates that the manufacturing equipment costs \($3MM\). The development time is estimated to be one year at a cost of \($2MM\). The net working capital is \($2MM\). The fixed cost is \($1.5MM\) per year, and the variable cost is \($80\) per unit. Should the project be undertaken based on the NPV with a 20% discount rate? Also, consider the investor’s rate of return given that the prevailing bank interest rate is 5%. Use the five-year class life in the Modified Accelerated Cost Recovery System for depreciation. Assume a negligible market value of the equipment after three years. Use an overall tax rate of 40% which is a combination of the 35% federal rate and the average rate levied by the states. Management needs to know the amount of cash required to carry out this project.