using only excel formulas and references.

You are CEO of Rivet Networks, maker of ultra-high perfomance network cards for gaming computers, and you are g whether to launch a new product. The product, the Killer X3000, will cost $900,000 to develop upfrornt (year 0), and you expect revenues the first year of $800,000, declining by 40% growing to $1.5 milion the second year, and then per year for the next 3 years before the product is fully obsolete. In years 1 through 5, you will have d costs associated with the product of $100,000 per year, and variable costs equal to 50% 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 50% in 5% increments. c. what is the project's NPV if the project's cost of capital is 10%? 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 or calculate it using the data Initial investment Revenues year 1 Revenues year 2 Revenues decline years 3-5 Fired costs years 1-5 Variable costs S 900,000 S 800,000 S 1,500,000 40% S 100,000 50%