Innovation Company is thinking about marketing a new software product. Upfront costs to market and develop the product are

$$$$4\mathrm{.}954\mathrm{.}95$

million. The product is expected to generate profits of

$$$$1\mathrm{.}171\mathrm{.}17$

million per year for

$1010$

years. The company will have to provide product support expected to cost

$$$$99$ comma $00099,000$

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

$5\mathrm{.}7\%5\mathrm{.}7\%?$

Should the firm undertake the$$ project? Repeat the analysis for discount rates of

$1\mathrm{.}2\%1\mathrm{.}2\%$

and

$17\mathrm{.}0\%17\mathrm{.}0\%,$

respectively.

b$.$ What is the IRR of this investment$$ opportunity?$$

c$.$ What does the IRR rule indicate about this$$ investment?

Question content area bottom

Part $1$

a$.$ What is the NPV of this investment if the cost of capital is

$5\mathrm{.}7\%5\mathrm{.}7\%?$

Should the firm undertake the$$ project? Repeat the analysis for discount rates of

$1\mathrm{.}2\%1\mathrm{.}2\%$

and

$17\mathrm{.}0\%17\mathrm{.}0\%,$

respectively.

If the cost of capital is

$5\mathrm{.}7\%5\mathrm{.}7\%,$

the NPV will be

$$$enter your response here.

$($Round to the nearest$$ dollar.$)$