Dell just demonstrated their new Dell Microchip. Dell wants you to help assess the Microchip. Dell spent $1 million developing the prototype that showcased on stage, $1 million each on three other prototypes, and an additional $300 million in research and development (their R&D expense for the twelve months ending June 30, 2022, was $2.883 billion). The project will officially begin (t=0) in January 2023. At the end of 2027 (t=5), Dell expects this Chip 1.0 project to end and make way for Chip 2.0. The tooling and equipment required for producing the Chip will cost $2.5 billion. The tooling and equipment is classified as a seven-year asset and will be depreciated using Modified ACRS depreciation (see Table 10.7); no bonus depreciation will be used. The estimated market value of the tooling and equipment at the end of the project is $250 million. Dell plans to make millions of Chips (true story). Their goal is to get 700,000 of them produced and sold in the first 5 years. In year one, Dell thinks they can sell 60,000 Chips. The following four years they expect quantity sold to grow by 40% per year. Dell believes that the Microchip will sell for $20,000. Dell doesnt have much experience producing computers and there will be a host of challenges involved in giving the consumer what they might want in a microchip. But Dell believes they can take advantage of hardware, software, manufacturing and supply chain advantages developed for its computer business. Dell thinks the variable costs will be $13,000. Fixed costs for the Microchip production are estimated to be $9.5 million per year. Net working capital for the Chip project will be 25% of sales and will occur with the timing of the cash flows for the year. There is no initial outlay for NWC; changes in NWC will first occur in year one with the first years sales. Dell's tax rate is 11% and they have a required return of 22%. Tesla thinks that chips will often be bought with other products, maybe around 50% of the chips will also include a computer sale. While a computer usually sells for $11,500, Dell will offer a discount of 20% if you buy a computer with your chip. Variable costs for the computer are $7,500.There are no fixed costs, investments in NWC, or capital expenditures associated with the additional computer sales. a) What is the payback period of the Dell Microchip? b) What is the profitability index of the project? c) What is the IRR of the project? d) What is the NPV of the project?