Conch Republic Electronics is a mid-sized electronics manufacturer located in Key West, Florida. The company president is Shelly Couts, who inherited the business from her family. Over the years, the company has expanded, and it is now a reputable manufacturer of various specialty electronic items. One of the major revenue-producing items manufactured by Conch Republic is a Personal Digital Assistant (PDA). It has one PDA model on the market and sales have been excellent. However, as with any electronic item, technology changes rapidly, and the current PDA has limited features in comparison with newer models. Conch Republic can manufacture the new PDA for $88 each in variable costs. Fixed costs for the operation are estimated to run $2.5 million per year. The estimated sales volume is 80,000, 80,000, 100,000, 85,000, and 70,000 per each year for the next five years, respectively. The unit price of the new PDA will be $250. The necessary equipment can be purchased for $15 million and will be depreciated on a 6-year MACRS* schedule. It is believed the savage value of the equipment will be $3 million and the company will sell the equipment for that amount in the end of year 5. Net working capital for the PDAs will be 20 percent of sales and will occur with the timing of the cash flows for the year (i.e., there is no NWC for year 0), NWC will thus first occur in Year 1 with the first years sales. All NWC will be used in the year, and no NWC will be recuperated in the last year. Conch Republic has a 35% corporate tax rate and a 12% required return for all projects. Ms. Couts has asked you to perform the following financial tasks for the business. You should do your work on an Excel spreadsheet. 1. Calculate the CFFA for the five years (5 points) 2. Calculate the IRR of the project. (5 points) 3. Calculate the NPV of the project. (4 points) 4. Perform a NPV sensitive analysis** for changes in the price of the new PDA. (3 points). 5. Perform a NPV sensitive analysis** for changes in the quantity sold of the new PDA. (3 points) **Price/Quantity Sensitivity Analysis: Increase/decrease price by a certain percentage, to find the effects on the projects NPV. *Use 6 year MACRS Table in the book