Case Study: K-Virg, Inc. You are Chief Financial Officer at K-Vire, Inc., the leading inventor of the Covid-19 chewable gummy vaccine, shown to be 101% effective. The media has called this product "the most revolutionary scientific discovery since the iPhone". Given the positive sentiment around the company, your firm's Chief Marketing Officer, Roberto Santos, wants to do a massive advertising campaign around the world. The campaign will cost $50,000,000. Currently, sales at K-Virg are $0 as the chewable vaccine is the first product to make it through FDA approval for the company. Your financial analyst, Frederick Smith, projects Sales to be $1,500,000 with total costs to be $600,000 next year. It is expected that sales will grow 50% in year 2, 30% in years 3 & 4, and then 5% year 5 and beyond. Costs will grow similarly. Your tax rate is 20% for all years. Part 1 Case Study Problems: (PLEASE SOLVE NO. C ONLY) A. What is the NPV of the project if the borrowing rate to fund the project was 7%? Would you accept the Chief Marketing Officer, Roberto Santos' plan - why or why not? *remember to use after tax cash flows for the project. B. Same question as A but assume the borrowing rate to fund the project was 14%. C. What is the IRR of the project using the after-tax cash-flows* from A & B. Would you accept the project under this decision rule? *These cashflows would be undiscounted but you would include the terminal value