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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.

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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 $891,000 to develop up front (year 0), and you expect revenues the first year of $807,000, growing to $1.52 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 $92,000 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 10,4%? 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. What are the cash flows for the project in years through 5? Calculate the cash flows below. (Round to the nearest dollar:) 0 1 $ 0$ 807.000 Revenues YOY growth Variable costs % of sales Fixed coats 55% 10,1 Investment (891,000) (891.000) V1 Total cash flows

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