conch Republic Electronics, Part 1 condt Republic Electronics is a midsized electronics manu- be purchased for $49.5 million and will be depreciated on a peture located in Key West, Florida. The company president seven-year MACRS schedule. It is believed the value of the 6 Shelley Couts, who inherited the company. When it was equipment in five years will be $6.8 million. fouthed over 70 years ago, the company originally repaired As previously stated, Conch Republic currently manupros and other houschoid appliances. Over the years, the factures a smartphone. Production of the existing model is compay expanded into manufacturing and is now a reputa- expected to be terminated in two years. If Conch Republic bicent MBA graduate, has been hired by the company's finance units and 65.000 units for the nex mill be 95.000 deparment: price of the existing smartphone is $435 per unit, with variable One of the major revenue-producing items manufactured costs of $155 each and fixed costs of $4.3 million per year. w Conch Republic is a smartphone. Conch Republic currently If Conch Republic does introduce the new smartphone. sales has one smartphone model on the market, and sales have been of the existing smartphone will fall by 30,000 units per year. eceelient. The smartphone is a untque item in that it comes in a and the price of the existing units will have to be lowered to whey of tropical colors and is preprogrammed to play Jimmy $235 each. Net working capital for the smartphones will be buthet danges rapidly, and the current smartphone has limited flows for the year: for example. there is no initial outly for fealures in comparison with newer models. Conch Republic NWC, but changes in NWC will first oeeur in Year 1 with the spat $950,000 to develop a prototype for a new smartphone first year's sales. Conch Republic has a 21 percent corporate that has all the features of the existing smartphone but adds tax rate and a required return of 12 percent. now features such as WiFi tethering. The company has spent Shelley has asked Jay to prepare a report that answers the a further $250,000 for a marketing study to determine the following questions. expected sales figures for the new smartphone: Conch Republic can manufacture the new smartphones for QUESTIONS 5245 each in variable costs. Fixed costs for the operation are 1. What is the payback period of the project? ecimated to run $6.9 million per year. The estimated sales vol- 2. What is the profitability index of the project? une is 160,000,170,000,130,000,105,000, and 80.000 per year tor the nexifive years, respectively. The unit price of the 3. What is the IRR of the project? 4. What is the NPV of the project? conch Republic Electronics, Part 1 condt Republic Electronics is a midsized electronics manu- be purchased for $49.5 million and will be depreciated on a peture located in Key West, Florida. The company president seven-year MACRS schedule. It is believed the value of the 6 Shelley Couts, who inherited the company. When it was equipment in five years will be $6.8 million. fouthed over 70 years ago, the company originally repaired As previously stated, Conch Republic currently manupros and other houschoid appliances. Over the years, the factures a smartphone. Production of the existing model is compay expanded into manufacturing and is now a reputa- expected to be terminated in two years. If Conch Republic bicent MBA graduate, has been hired by the company's finance units and 65.000 units for the nex mill be 95.000 deparment: price of the existing smartphone is $435 per unit, with variable One of the major revenue-producing items manufactured costs of $155 each and fixed costs of $4.3 million per year. w Conch Republic is a smartphone. Conch Republic currently If Conch Republic does introduce the new smartphone. sales has one smartphone model on the market, and sales have been of the existing smartphone will fall by 30,000 units per year. eceelient. The smartphone is a untque item in that it comes in a and the price of the existing units will have to be lowered to whey of tropical colors and is preprogrammed to play Jimmy $235 each. Net working capital for the smartphones will be buthet danges rapidly, and the current smartphone has limited flows for the year: for example. there is no initial outly for fealures in comparison with newer models. Conch Republic NWC, but changes in NWC will first oeeur in Year 1 with the spat $950,000 to develop a prototype for a new smartphone first year's sales. Conch Republic has a 21 percent corporate that has all the features of the existing smartphone but adds tax rate and a required return of 12 percent. now features such as WiFi tethering. The company has spent Shelley has asked Jay to prepare a report that answers the a further $250,000 for a marketing study to determine the following questions. expected sales figures for the new smartphone: Conch Republic can manufacture the new smartphones for QUESTIONS 5245 each in variable costs. Fixed costs for the operation are 1. What is the payback period of the project? ecimated to run $6.9 million per year. The estimated sales vol- 2. What is the profitability index of the project? une is 160,000,170,000,130,000,105,000, and 80.000 per year tor the nexifive years, respectively. The unit price of the 3. What is the IRR of the project? 4. What is the NPV of the project