Adamax has paid McKinsey $300,000 for a feasibility study to evaluate the attractiveness of a potential new product line. Adamax is considering producing a wireless home networking appliance called ResiNet. Marketing analysts have estimated that that Adamax will be able to sell 100,000 units per year of ResiNet. It will be sold wholesale for $260 per unit to electronics stores, which will then sell them retail for $375 per unit. Adamax expects total costs for engineering and designing the product to amount to $5 million (this is treated as an expense in Year 0). In addition, Adamax will have to hire 50 software engineers during the start-up year, with each engineer costing $200,000 per year. Finally, Adamax will have to incur an upfront investment of $7.5 million for new equipment. The equipment will have a life of 5 years and will be depreciated using MACRS. The equipment will be sold in at beginning Year 5 for $1 million. During the four-year lifetime of the operations (Years 1-4), production will be outsourced at a cost of $110 per unit. Adamax also expects to spend $2.8 million per year on the cost of marketing and support for the product. Adamax will have no incremental inventory requirements. However, receivables are projected to account for 15% of annual sales, while payables are projected to be 50% of the annual cost of goods sold. Adamax faces a corporate income tax rate of 40% and a discount rate of 12%. (If net income is negative in a given year, assume that Adamax gets a tax refund.) Should Adamax undertake the project?

please submit your excel worksheet(via email). as well as a brief memo(printout) with your recommendation and explanation.