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 $890,000 to develop up front (year 0), and you expect revenues the first year of $792,000, growing to $1.42 million the second year , and then declining by 35% 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 $95,000 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 40% in 10% increments. c. What is the project's NPV if the project's cost of capital is 10.6%? 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. .. 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 4 5 Revenues $ 0 $ 792.000 $ 1,420,000 79.3% YOY growth (35%) (35%) (35%) 0:00 Variable costs % of sales 50% 50% 50% 50% 50% Fixed costs (890,000) Investment Total cash flows (890,000) 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.) OA. . NPV Profile NPV Profile 700,0008 700.000 Q 500.000 500,000 300.000 300.000 NPV ($) NPV ($) 100,000 100.000 10 15 20 15 20 25 30 35 40 -100,000 - 100.000- -300,000- -300,000- Discount Rate (%) Discount Rate (%) c. What is the project's NPV if the project's cost of capital is 10.6%? The NPV is $. (Round to the nearest dollar.) d. Use the NPV profile to estimate the cost of capital at which the project would become unprofitable; that is, estimate the projects IRR. (For a zoom in on the NPV profile, click here w.) Based on the NPV profile, the approximate internal rate of return is %. (Round to the nearest integer.) - Graph/chart NAV Profile a 200,000 a CS 100,000 NPV ($) 0- 10 15 20 25 30 35 - 100,000 -200.000- Discount Rate (%)