You are CEO of Terminator plc., maker of ultra-high performance network cards for gaming computers, and you are considering whether to launch a new product. The product, the T-888, will cost $1,000,000 to develop upfront (year 0), and you expect revenues the first year of $800,000, growing to $1.5 million the second year, and then declining by 50% 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 $200,000 per year, and variable costs equal to 20% of revenues. Excel is allowed for this question. Please round your answers to two decimals. a) What arethe cash flows for the project in years 0 through 5? (5 marks) b) Plot the NPV profile for this investment from 0% to 80% in 20% increments. (5 marks) c) What is the projects NPV if the projects cost of capital is 20%? (5 marks) d) Use the NPV profile to estimate the cost of capital at which the project would become unprofitable; that is, estimate the projects IRR. (5 marks

You are CEO of Terminator plc., maker of ultra-high performance network cards for gaming computers, and you are considering whether to launch a new product. The product, the T-888, will cost $1,000,000 to develop upfront (year 0), and you expect revenues the first year of $800,000, growing to $1.5 million the second year, and then declining by 50% 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 $200,000 per year, and variable costs equal to 20% of revenues. Excel is allowed for this question. Please round your answers to two decimals. a) What arethe cash flows for the project in years 0 through 5? (5 marks) b) Plot the NPV profile for this investment from 0% to 80% in 20% increments. (5 marks) c) What is the project's NPV if the project's cost of capital is 20%? (5 marks) 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