% P7-8 (similar to) Question Help You are CEO of Rivet Networks, maker of ultra-high performance network cards for gaming computers, and you are considering whether to launch a new product. The product, the Killer X3000 will cost $900.000 to develop up front (vear O), and you expect revenues the first year of $807,000, growing to $1.42 million the second year, and then declining by 35% per year for the next 3 years before the product is fully obsolete. In years 1 through 5, you will have fixed costs associated with the product of $105,000 per year, and variable costs equal to 55% of revenues. a. What are the cash flows for the project in years 0 through 5? b. Plot the NPV profile for this investment using discount rates from 0% to 40% in 10% increments. c. What is the project's NPV if the project's cost of capital is 10.9%? d. Use the NPV profile to estimate the cost of capital at which the project would become unprofitable; that is, estimate the project's IRR. a. What are the cash flows for the project in years 0 through 5? Calculate the cash flows below: (Round to the nearest dollar.) 0 1 807,000 $ 0 $ Revenues YOY growth Variable costs 2 1,420,000 76% % of sales (443,850) 55% (105,000) 55% Fixed costs Investment (900,000) Enter any number in the edit fields and then click Check