3. Bhalu electronics has developed a new chip for use with the 5G network. The R&D (Research and Development) cost in developing this chip was $5.0 million. Company policy is not to sell its R&D to outside parties. The company is now considering going into production. The company has a plot in an industrial park which was purchased for $2.0 million three years ago. The current market price of the land is $2.5 million after tax. The chip has a life of 6 years after which it will become obsolete and will not be produced anymore. At the end of the life of the project, the land will be sold for $2.75 million after tax. The plant and equipment necessary for production will cost $4.5 million and will be depreciated according to a 5 year MACR schedule. The salvage value of the equipment will be $0.5 million. Sales revenue each year will be $7 million and operating costs not including depreciation will be $2.5 million. Net working capital requirement for the project is estimated to be $1.2 million which will be recovered at the end of the life of the project. Bhalu has a tax rate of 34%. The required return on the project is 12 percent. What is the NPV of the project? What is its IRR? What is the payback of this project? 5 Year MACR Schedule Year 2 | MACR Depreciation Rate 20% 32% 19.2% 11.52% 11.52% 5.76% 5