Innovation Company is thinking about marketing a new software product. Upfront costs to market and develop the product are $4.97 million. The product is expected to generate profits of $1.06 million per year for 10 years. The company will have to provide product support expected to cost $95,000 per year in perpetuity. Assume all profits and expenses occur at the end of the year. a. What is the NPV of this investment if the cost of capital is 5.8%? Should the firm undertake the project? Repeat the analysis for discount rates of 1.6% and 13.8%, respectively. b. What is the IRR of this investment opportunity? c. What does the IRR rule indicate about this investment? a. What is the NPV of this investment if the cost of capital is 5.8%? Should the firm undertake the project? Repeat the analysis for discount rates of 1.6% and 13.8%, respectively. If the cost of capital is 5.8%, the NPV will be $. (Round to the nearest dollar.) You are a manager at Northern Fibre, which is considering expanding its operations in synthetic fibre manufacturing. Your boss comes into your office, drops a consultant's report on your desk, and complains, "We owe these consultants $1.5 million for this report, and I am not sure their analysis makes sense. Before we spend the $15 million on new equipment needed for this project, look it over and give me your opinion." You open the report and find the following estimates (in millions of dollars): 1 2 9 10 Sales revenue 28.000 28.000 28.000 28.000 - Cost of goods sold 16.800 16.800 16.800 16.800 = Gross profit 11.200 11.200 11.200 11.200 - General, sales, and administrative expenses 1.200 1.200 1.200 1.200 - Depreciation 1.500 1.500 1.500 1.500 = Net operating income 8.5000 8.5000 8.5000 8.5000 - Income tax 2.975 2.975 2.975 2.975 b. If the cost of capital for this project is 12%, what is your estimate of the value of the new project? Value of project = 5 million (Round to three decimal places.)