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It is the beginning of 1979. Atari has decided to introduce a new video game system called the Atan VCS2600. The system will sell for

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It is the beginning of 1979. Atari has decided to introduce a new video game system called the Atan VCS2600. The system will sell for $140. Demand is forecast at 2.5 million units per year for four years (1979, 1980, 1981, 1982) but a particularly insightful economic analyst suggests that demand will fall by 30 percent in the following year (1983). For each system sold, 10 game cartridges will be sold at a price of $20 per cartridge. The system has a variable cost of $40 and each game cartridge has a variable cost of $4. Fixed costs are $8 million per year, including advertising spending. The equipment used to manufacture the VCS2600 has a cost of $4 million and will be depreciated on a straight-line basis over the period of five years. The taxation rate is 30 pereent. The relevant discount rate is 18 pereent. Calculate the NPV of the Atari VCS2600 and advise whether the project should be undertaken. Requirement: 1. Please form a group of 3 students and answer the following questions. 2. Find the eash flow of the projects throughout the years 1979 to 1983 ? 3. Find the net present value of the project? 4. Based on your calculation of the present value, would you aceept or reject the project? 5. The students are expected to submit their assignment on the due date, every day after the deadtine will lead so a deduction of one mark

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