Diawoo is an emerging electronics manufacturer located in Seoul, South Korea. The company president is Lee Chong Wei, who is a second generation entrepreneur in his family. The company originally repaired electronic items and other household appliances when it was founded more than 50 years ago. Over the years, the company has expanded, and it is now a reputable manufacturer of various specialty electronic items like smart phones and tablets which it sells all over the world. Chandler Bing, a recent MBA graduate, has been hired by the company in its finance department. One of the major revenue-producing items manufactured by Diawoo is a smartphone with innovative features. Diawoo currently has one smartphone model on the market and sales have been excellent. The smartphone is a unique item in that it comes in a variety of over 20 novel colors and is pre-programmed to play customizable genres of music. However, as has been the case with smartphones, technology changes rapidly, and the current smartphone has limited features in comparison with newer models. Diawoo spent $750,000 to develop a prototype for a new smartphone that has all the features of the existing one but adds new features such as hotspot tethering. The company has spent a further $200,000 for a marketing study to determine the expected sales figures for the new smartphone. Diawoo can manufacture the new smartphone by purchasing the equipment from Taiwan. The necessary equipment can be purchased for $32.5 million and will be depreciated on a seven-year MACRS schedule. The MACRS depreciation rates are 0.1429, 0.2449, 0.1749, 0.1249, 0.0893, 0.0892, 0.0893, 0.0446. The cost of manufacture would be $202 per unit in variable costs. Fixed costs for the operation are estimated to run $5.1 million per year. The estimated sales volume is 66,000, 104,000, 87,000, 78,000, and 54,000 per year for the next five years, respectively. The unit price of the new smartphone will be $475. It is believed the value of the equipment in five years will be $5.4 million. Net working capital for the smartphones will be 20 percent of sales and will occur with the timing of the cash flows for the year (i.e., there is no initial outlay for NWC). Changes in NWC will thus first occur in Year 1 with the first years sales. Diawoo has a 34 percent corporate tax rate and a required return of 15 percent. Lee Chong Wei has asked Chandler Bing to prepare a report that answers the following questions:

A. What is the NPV of the project? B. What is the IRR of the project? C. What is the Payback of the project?