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Purdue Electronics is a electronics manufacturer located in West Lafayette, Indiana. One of the major revenue-producing items manufactured by Purdue is a smartphone. Purdue currently

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Purdue Electronics is a electronics manufacturer located in West Lafayette, Indiana. One of the major revenue-producing items manufactured by Purdue is a smartphone. Purdue currently has one smartphone model on the market. As the technology changes rapidly, however, the old model will become obsolete in a year. Purdue can manufacture the new smartphones for $300 each in variable costs. Fixed costs is $10 million per year. The estimated sales volume is 150,000, 150,000, 150,000 units per year for the next three years, respectively. The unit price of the new model will be $600. The new equipment can be purchased for $50 million and will be depreciated on a five-year MACRS schedule. The salvage value of the machine will be $10 million. The sales of old model will be 100,000 units next year and unaffected by the introduction of the new model. The price of the old model is $400 per unit, with variable costs of $100 each and fixed costs of $4 million per year. The one-time investment in net working capital for the new model is $5 million at year 1. Purdue has a 21% corporate tax rate and a required rate of return of 15%. Now with given information, answer the following questions. Round your answers to the nearest ones. No units or signs in your answers (please write 10000000 for 10 million), #1. What is the dollar amount of sales each year? #2. What is the after-tax salvage value? #3. What is the cash flow from net working capital (NWC) in year 3? #4. What is the operating cash flow (OCF) at year 1? #5. What is the NPV of the project (Round to the nearest 1,000)? #6. What is the IRR of the project? #7. What is the profitability index (Pl) of the project (Round to the nearest 0.0 Blank # 1 Blank # 2 A Blank # 3 2 Blank #4 2 Blank # 5 Blank # 6 Blank # 7 A/

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