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Cisco is considering the development of a wireless home networking appliance, called HomeNet. The company expects to sell 3 4 0 0 0 0 units
Cisco is considering the development of a wireless home networking appliance, called HomeNet. The company expects to sell units per year over the project's life at an expected wholesale price of Actual production will be outsourced at a cost of per unit. Additionally, the company will spend $ in interest expense each year towards financing the project. In year the firm must increase its accounts receivable by $ which will return to regular levels at the end of the project. The company spent $ last year on software to develop the router. $ million of new equipment will be purchased and then depreciated using the straightline method over a year life. They expect the market value of the equipment to depreciate at per year. The project is expected to end in year The current tax rate is Use this rate for both income tax rate and the capital gains rate. The WACC for the company is What is the NPV of the project?
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