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 X$3000,$ will cost $$906,000$ to develop up front $($year $0),$ and you expect revenues the first year of $$803,000,$ growing to $$1\mathrm{.}46$ million the second year, and then declining by $45\%$ 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 $$109,000$ per year, and variable costs equal to $45\%$ of revenues.$$

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

$9\mathrm{.}5\%9\mathrm{.}5\%?$

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.

I asked question previously and it seems to me like they erroneously used the Variable Cost Rate $(45\%)$ to calculate declining revenues which should have declined at $(40\%).$ Can you validate the accuracy of the answer that was given, $"$To calculate the revenues for years $3-5,$ we need to apply the $45\%$ decline each year from Year $2$ revenue. Is to calc, VC not Revnue

Year $3$: $$1,460,000*(1-0\mathrm{.}45)=$ $$803,000$

Year $4$: $$803,000*(1-0\mathrm{.}45)=$ $$441,650$

Year $5$: $$441,650*(1-0\mathrm{.}45)=$ $$242,407\mathrm{.}5"$