7. Asbury Park Computers (APC) is a manufacturer of PCs, tablets, etc. located in New Jersey. The company has established a successful niche for tablets used in the educational market. While the product has done well, its not easy to keep up with Apple, Samsung, et al. The company is therefore working on their latest model that they plan to launch at the end of 2022. They have already spent $1 million on R&D for the product and another $100,000 to commission a marketing study that is the basis for their sales forecasts for the new product. The product is expected to be on the market for five years. Unit sales in 2023 are forecast to be 120,000 and are expected to grow 5% per year. The unit selling price for the tablet will be $525. Variable cost will be $325 and annual fixed cost is expected to be $6.3 million. The company will need to purchase new equipment to manufacture the tablets that will cost $45 million. It will be fully depreciated on a straight line basis over the life of the product but is expected to have a $5 million salvage value. Net working capital will start in the first year of production and will be 20% of sales. It will grow each year at the same rate as sales. APCs tax rate is 21% and its required return on capital is 12%.

1. Calculate the operating cash flow for the upfront investment and then each of the projects five years.
2. Calculate for the project the
   1. Payback period
   2. IRR
   3. NPV