2. An e-commerce firm is developing a new application.

Financial analysts have estimated the expenses and revenues over the next five years:

Month Development Expense Operating Expense Revenue Initial investment $50,000.00 $— $—

Year 1 $10,000.00 $10,000.00 $5,000.00 Year 2 $— $10,000.00 $15,000.00 Year 3 $— $10,000.00 $25,000.00 Year 4 $— $10,000.00 $50,000.00 Year 5 $— $10,000.00 $50,000.00 The company’s discount rate is 8%. Compute the NPV and IRR for net profit and make a recommendation on whether or not to pursue the project. Then, use a data table to evaluate the impact of changing the initial investment in increments of $5,000 between $30,000 and $70,000. What might this mean with regard to the company’s decision?