Its 1979. Mattel Electronics wants to enter the booming home computer game industry. The industry has some established players, including Atari, and competition will be fierce. Mattels product is called Intellivision. Compute the net present value for the project and advise management as to whether the project should be accepted.

Capital investment of $100,000,000 required at year 0 (1979).

Working capital allocation: $30,000,000.

The company has completed a market survey at a cost of $12,000,000.

Sales (units): 500,000 per year.

Selling price per unit: $299 in years 1, 2 and 3 (1980, 1981, 1982).

Selling price per unit: $69 in years 4 and 5.

Fixed costs are $10,000,000 per year.

Variable costs are $80 per unit.

The capital equipment is depreciated straight-line to zero.

The working capital is returned in the final year of the project.

The corporate taxation rate is 30%.

The required rate of return is 16%.

In years when the EBIT is negative, taxes are zero.