Each of your puzzles are made by in your own facility.

Your puzzle machine will cost you $$2,400,000$ and will be depreciated over

five years. You expect that you should be able to sell the new machine for $$3,200,000$ at the

end of year five.

The puzzle, box, and outer sleeve cost $$7\mathrm{.}78$ per puzzle to manufacture. Shipping to your

headquarters in Utah will cost $$0\mathrm{.}35$ per puzzle. Your new puzzle headquarters will be in

Mapleton, Utah and consist of offices and a small warehouse space for order fulfillment. Each

puzzle is expected to sell for $$29\mathrm{.}99$ and customers cover all shipping costs. The company has a

tax rate of $27\%.$ Remember, taxes are only paid on gains.

The company also has operating expenses, of which depreciation is included, of approximately $1,075,000$

per year.

You will also need to invest $$1,600,000$ in inventory to be ready to go live.

In a recent presentation to investors, you projected sales of $100,000$ puzzles in year one, followed

by annual growth of $32\%$ in year two and year three and $20\%$ in year four and five.

At the end of year five, it is likely you will be able to sell the company for $$6,100,000.$

The government two$-$year bond is trading at $2\mathrm{.}6\%$ while the five$-$year bond trades at $3\mathrm{.}2\%.$ Last

year, the US equity markets rose by $20\mathrm{.}5\%$ which was the same as it has been for the last five

years. Other toy companies that trade in public markets have a beta of approximately $1\mathrm{.}6.$

You recently issued a bond at $$850$ with a maturity of $15$ years. The bond pays coupons annually and has

a coupon of $5\%$ while current interest rates are $9\%.$ There is a $4\%$ flotation cost on your bonds. There are

$1000$ bonds outstanding. Your puzzle company has no preferred stock but its equity was raised by issuing

common stock at $$60$ per share with a $4\%$ flotation cost on a base of $200,000$ shares.

Calculate your puzzle company$$s NPV$,$ IRR, and Payback Period