Determine whether HP should produce a high-end smartphone. The project lasts 6 years.

Investments: $30 million in year 0 for machinery. Assume straight-line depreciation over 6 years.

Machinery will be sold for $2.5 million at the projects end.

NWC of $3 million to begin the project, which will increase at a 4% rate each year

Revenue and cost estimates: $50 million in year 1, growing at 10% yearly after

Annual operating costs of (a) $30 million fixed, and (b) variable costs of 30% of annual revenues

Tax rate = 30%, Discount rate = 12%

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