Electronics Unlimited was considering the introduction of a new product (question 2). Can you help answer A,B, and C. I'd like to see your work so that i understand the problem.

C. ! If the projects are independent of each other, which should be accepted! exclusive (i.e., one and only one can be accepted), which one is best? Electronics Unlimited was considering the introduction of a new product to reach sales of $10 million in its first full year, and $13 million o 8 the introduction of a new product that was expected Because of intense competition and rapid product obsolesce non in its first full year, and $13 million of sales in the second year. "Petition and rapid product obsolescence, sales of the new product introduction. Thereafter, annual sales were expected to decline to two-third gea between the second and third years following sales were expected to decline to two-thirds of peak annual sales in the fourth year, and one-third of peak sales in the fifth year. No mater revenues or expenses associated with the new product were expected after se Based on past experience, cost of sales for the new product were expected to be 60% OF A annual sales revenue during each year of its life cycle. Selling, general, and adminis expenses were expected to be 23.5% of total annual sales. Taxes on profits generated by the new product would be paid at a 40% rate. To launch the new product, Electronics Unlimited would have to incur immediate cash outlays of two types. First, it would have to invest $500,000 in specialized new production equipment. This capital investment would be fully depreciated on a straight-line basis over the five-year anticipated life cycle of the new product. It was not expected to have any material salvage value at the end of its depreciable life. No further fixed capital expenditures were required after the initial purchase of equipment. Second, additional investment in net working capital to support sales would have to be made. Electronics Unlimited generally required 27 of net working capital to support each dollar of sales. As a practical matter, this buildup would have to be made by the beginning of the sales year in question (or, equivalently, by the end of the previous year). As sales gre net working capital ahead of sales would have to be made. As sales ng capital would be liquidated and cash recovered. At the end of the new product's life cycle, all remaining net working capital would be liquidated and the recovered. 2 0 20 fought by KORY cu Valuing Capital Investment Projects 298-092 Finally, Electronics Unlimited expected to incur tax-deductible introductory expenses of $200,000 in the first year of the new product's sales. These costs would not be recurring over the product's life cycle. Approximately $1.0 million had already been spent developing and test marketing the new product. These expenditures were also one-time expenses that would not be recurring during the new product's life cycle. A. Estimate the new product's future sales, profits, and cash flows throughout its five-year life cycle. Assuming a 20% discount rate, what is the product's net present value? (Except for changes in net working capital, which must be made before the start of each sales year, you should assume that all cash flows occur at the end of the year in question.) What is its internal rate of return? C. Should Electronics Unlimited introduce the new product? 3. You are the CEO of Valu-Added Industries, Inc. (VAI). Your firm has 10,000 shares of common stock outstanding, and the current price of the stock is $100 per share. There is no debt; thus, the "market value" balance sheet of VAI appears as follows: VAI Market Value Balance Sheet $1,000,000 Equity Assets $1,000,000