a.	What is the profitability index of the project?
b.	What is the IRR of the project?
c.	What is the NPV of the project?
d.	How sensitive is the NPV to changes in the price of the new PDA?
e.	How sensitive is the NPV to changes in the quantity sold?

$ Equipment Pretax salvage value $ R&D 32,500,000 3,500,000 750,000 200,000 Marketing study $ Year 3 108,000 Year 4 94,000 Year 5 57,000 Sales (units) Sales of old PDA Lost sales Depreciation rate Year 1 65,000 80,000 15,000 14.29% Year 2 82,000 60,000 15,000 24.49% 17.45% 329% 17.49% 2954 12.49% 8.93% Price 500 215 4,300,000 35% 20% 12% Tax rate NWC percentage Required return Sales VC Fixed costs Dep EBT Tax Year 1 $32,500,000 13,975,000 4,300,000 4,644,250 $9,580,750 3,353,263 $6,227,488 4,644,250 $10,871,738 Year 2 $41,000,000 17,630,000 4,300,000 7,959,250 $11,110,750 3,888,763 $7,221,988 7,959,250 $15,181,238 Year 3 $54,000,000 23,220,000 4,300,000 5,684,250 $20,795,750 7,278,513 $13,517,238 5,684,250 $19,201,488 Year 4 $47,000,000 20,210,000 4,300,000 4,059,250 $18,430,750 6,450,763 $11,979,988 4,059,250 $16,039,238 Year 5 $28,500,000 12,255,000 4,300,000 2,902,250 $9,042,750 3,164,963 $5,877,788 2,902,250 $8,780,038 NI Dep OCF $0 $9,400,000 NWC Beg End NWC CF 6,500,000 ($6,500,000) $6,500,000 8,200,000 ($1,700,000) $8,200,000 10,800,000 ($2,600,000) $10,800,000 9,400,000 $1,400,000 $9,400,000 Net CF $4,371,738 $13,481,238 $16,601,488 $17,439,238 $18,180,038 Salvage BV of equipment Taxes $ $ 7,250,750 1,312,763 Salvage CF $ 4,812,763 Time $ Cash flow (32,500,000) 4,371,738 13,481,238 16,601,488 17,439,238 22,992,800