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Cisco is considering the development of a wireless home networking appliance, called HomeNet. The company expects to sell 310000 units per year over the project's

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Cisco is considering the development of a wireless home networking appliance, called HomeNet. The company expects to sell 310000 units per year over the project's fife at an expected wholesale price of 170 . Actual production will be outsourced at a cost of 94 per unit. Additionally, the compariy will spend $27000 in interest expense each year towards financing the project. In year 1 , the firm must increase its accounts recelvable by $993000, which will return to regular levels at the end of the project. The compary spent $236000 last year on software to develop the router. $117.1million of new equipment will be purchased and then depreciated using the straight--line me thod over a 10 year iffe. They expect the market value of the equ pment to depreciate at 7.2% per year. The project is expected to end in year 8 . The current tax rate is 21 Use this rate for both income tax rate and the capital gains rate. The WACC for the company is 17.783 What is the NPV of the project? 157984354615886224.4716068046414650316.66

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