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 $395.000 to develop up front (year 0). and you expect revenues the first year of $809,000. growing to $1.46 million the second year, and then declining by 40% 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 $97,000 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 9.6%? 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 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 2 3 3 4 5 $ 0$ 800,000 $ 1,460,000 Revenues YOY growth 80.594 (40%) (40%) (40%) Variable costs % of sales 55% 55% 55% 55% 55% Fixed costs Investment (895,000) (895,000) Total cash flows b. Plot the NPV profile for this investment using discount rates from 0% to 40% in 10% increments. The graph depicting the correct NPV profile is: (Select the best choice below. . OB. NPV Profile a NPV Profile a 700,000 700,000 500,000 500,000 300,000 / 300.000 NPV ($) 100,000 100,000 16 - 100.000 -100,000 -300,000 -300.000 Discount Rate (96) % Discount Rate (%) 9 c. What is the project's NPV if the project's cost of capital is 9.8%? The NPV is $. (Round to the nearest dollar.) 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. (For a zoom in on the NPV profile, click here ..) Based on the NPV profile, the approximate internal rate of return is % (Round to the nearest integer.)